TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
NYSE:TME - New York Stock Exchange, Inc. - US88034P1093 - ADR - Currency: USD
Overall TME gets a fundamental rating of 7 out of 10. We evaluated TME against 72 industry peers in the Entertainment industry. Both the health and profitability get an excellent rating, making TME a very profitable company, without any liquidiy or solvency issues. TME is not valued too expensively and it also shows a decent growth rate. These ratings would make TME suitable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year TME was profitable.
In the past year TME had a positive cash flow from operations.
Each year in the past 5 years TME has been profitable.
In the past 5 years TME always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of TME (7.35%) is better than 87.50% of its industry peers.
TME has a Return On Equity of 9.79%. This is amongst the best in the industry. TME outperforms 81.94% of its industry peers.
TME's Return On Invested Capital of 8.35% is amongst the best of the industry. TME outperforms 83.33% of its industry peers.
The Average Return On Invested Capital over the past 3 years for TME is significantly below the industry average of 23.07%.
The 3 year average ROIC (6.52%) for TME is below the current ROIC(8.35%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.35% | ||
| ROE | 9.79% | ||
| ROIC | 8.35% |
ROA(3y)6.45%
ROA(5y)5.99%
ROE(3y)8.75%
ROE(5y)8.04%
ROIC(3y)6.52%
ROIC(5y)5.78%
1.3 Margins
With an excellent Profit Margin value of 23.39%, TME belongs to the best of the industry, outperforming 94.44% of the companies in the same industry.
In the last couple of years the Profit Margin of TME has grown nicely.
TME's Operating Margin of 25.88% is amongst the best of the industry. TME outperforms 94.44% of its industry peers.
TME's Operating Margin has improved in the last couple of years.
TME has a Gross Margin (42.34%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of TME has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.88% | ||
| PM (TTM) | 23.39% | ||
| GM | 42.34% |
OM growth 3Y43.83%
OM growth 5Y10.87%
PM growth 3Y34.13%
PM growth 5Y8.36%
GM growth 3Y12.05%
GM growth 5Y4.42%
2. Health
2.1 Basic Checks
TME has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for TME has been reduced compared to 1 year ago.
The number of shares outstanding for TME has been reduced compared to 5 years ago.
TME has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 7.74 indicates that TME is not in any danger for bankruptcy at the moment.
TME's Altman-Z score of 7.74 is amongst the best of the industry. TME outperforms 88.89% of its industry peers.
TME has a debt to FCF ratio of 0.65. This is a very positive value and a sign of high solvency as it would only need 0.65 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 0.65, TME belongs to the best of the industry, outperforming 84.72% of the companies in the same industry.
A Debt/Equity ratio of 0.06 indicates that TME is not too dependend on debt financing.
The Debt to Equity ratio of TME (0.06) is better than 65.28% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.65 | ||
| Altman-Z | 7.74 |
ROIC/WACC1.19
WACC7.02%
2.3 Liquidity
A Current Ratio of 2.09 indicates that TME has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 2.09, TME belongs to the top of the industry, outperforming 80.56% of the companies in the same industry.
TME has a Quick Ratio of 2.09. This indicates that TME is financially healthy and has no problem in meeting its short term obligations.
TME's Quick ratio of 2.09 is amongst the best of the industry. TME outperforms 80.56% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 |
3. Growth
3.1 Past
TME shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 31.39%, which is quite impressive.
Measured over the past years, TME shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.88% on average per year.
TME shows a small growth in Revenue. In the last year, the Revenue has grown by 5.35%.
Measured over the past years, TME shows a small growth in Revenue. The Revenue has been growing by 2.23% on average per year.
EPS 1Y (TTM)31.39%
EPS 3Y25.91%
EPS 5Y10.88%
EPS Q2Q%25.69%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%8.69%
3.2 Future
TME is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.58% yearly.
TME is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.62% yearly.
EPS Next Y13.28%
EPS Next 2Y14.72%
EPS Next 3Y15.11%
EPS Next 5Y14.58%
Revenue Next Year10.6%
Revenue Next 2Y11.28%
Revenue Next 3Y11.21%
Revenue Next 5Y12.62%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
TME is valuated quite expensively with a Price/Earnings ratio of 29.76.
Based on the Price/Earnings ratio, TME is valued cheaply inside the industry as 80.56% of the companies are valued more expensively.
TME is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.50, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 23.80 indicates a rather expensive valuation of TME.
Based on the Price/Forward Earnings ratio, TME is valued a bit cheaper than the industry average as 73.61% of the companies are valued more expensively.
TME is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 36.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.76 | ||
| Fwd PE | 23.8 |
4.2 Price Multiples
TME's Enterprise Value to EBITDA is on the same level as the industry average.
Based on the Price/Free Cash Flow ratio, TME is valued a bit cheaper than the industry average as 73.61% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.64 | ||
| EV/EBITDA | 24.24 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
TME has an outstanding profitability rating, which may justify a higher PE ratio.
TME's earnings are expected to grow with 15.11% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.24
PEG (5Y)2.74
EPS Next 2Y14.72%
EPS Next 3Y15.11%
5. Dividend
5.1 Amount
TME has a Yearly Dividend Yield of 1.37%.
Compared to an average industry Dividend Yield of 6.22, TME pays a better dividend. On top of this TME pays more dividend than 87.50% of the companies listed in the same industry.
With a Dividend Yield of 1.37, TME pays less dividend than the S&P500 average, which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.37% |
5.2 History
TME is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
22.70% of the earnings are spent on dividend by TME. This is a low number and sustainable payout ratio.
DP22.7%
EPS Next 2Y14.72%
EPS Next 3Y15.11%
21.43
-0.93 (-4.16%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners77.07%
Inst Owner Change0.42%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap33.02B
Analysts81.21
Price Target19.26 (-10.13%)
Short Float %6.35%
Short Ratio3.32
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.37% |
Yearly Dividend0.13
Dividend Growth(5Y)N/A
DP22.7%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)3.87%
Min EPS beat(2)-4.78%
Max EPS beat(2)12.53%
EPS beat(4)3
Avg EPS beat(4)3.52%
Min EPS beat(4)-4.78%
Max EPS beat(4)12.53%
EPS beat(8)6
Avg EPS beat(8)3.05%
EPS beat(12)10
Avg EPS beat(12)4.95%
EPS beat(16)13
Avg EPS beat(16)6.94%
Revenue beat(2)1
Avg Revenue beat(2)-0.08%
Min Revenue beat(2)-1.38%
Max Revenue beat(2)1.21%
Revenue beat(4)2
Avg Revenue beat(4)0.05%
Min Revenue beat(4)-1.38%
Max Revenue beat(4)1.21%
Revenue beat(8)5
Avg Revenue beat(8)0.65%
Revenue beat(12)8
Avg Revenue beat(12)0.9%
Revenue beat(16)9
Avg Revenue beat(16)0.38%
PT rev (1m)11%
PT rev (3m)18.65%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.05%
EPS NY rev (1m)0%
EPS NY rev (3m)-3.1%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)-0.29%
Revenue NY rev (1m)0.07%
Revenue NY rev (3m)0.81%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.76 | ||
| Fwd PE | 23.8 | ||
| P/S | 8.35 | ||
| P/FCF | 25.64 | ||
| P/OCF | 23.07 | ||
| P/B | 3.49 | ||
| P/tB | 5.13 | ||
| EV/EBITDA | 24.24 |
EPS(TTM)0.72
EY3.36%
EPS(NY)0.9
Fwd EY4.2%
FCF(TTM)0.84
FCFY3.9%
OCF(TTM)0.93
OCFY4.33%
SpS2.57
BVpS6.14
TBVpS4.17
PEG (NY)2.24
PEG (5Y)2.74
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.35% | ||
| ROE | 9.79% | ||
| ROCE | 9.95% | ||
| ROIC | 8.35% | ||
| ROICexc | 13.22% | ||
| ROICexgc | 24.7% | ||
| OM | 25.88% | ||
| PM (TTM) | 23.39% | ||
| GM | 42.34% | ||
| FCFM | 32.54% |
ROA(3y)6.45%
ROA(5y)5.99%
ROE(3y)8.75%
ROE(5y)8.04%
ROIC(3y)6.52%
ROIC(5y)5.78%
ROICexc(3y)9.52%
ROICexc(5y)8.88%
ROICexgc(3y)19.59%
ROICexgc(5y)19.68%
ROCE(3y)7.76%
ROCE(5y)6.88%
ROICexcg growth 3Y16.02%
ROICexcg growth 5Y-26.04%
ROICexc growth 3Y28.21%
ROICexc growth 5Y-2.74%
OM growth 3Y43.83%
OM growth 5Y10.87%
PM growth 3Y34.13%
PM growth 5Y8.36%
GM growth 3Y12.05%
GM growth 5Y4.42%
F-Score7
Asset Turnover0.31
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.65 | ||
| Debt/EBITDA | 0.46 | ||
| Cap/Depr | 105.52% | ||
| Cap/Sales | 3.63% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 123.39% | ||
| Profit Quality | 139.12% | ||
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 | ||
| Altman-Z | 7.74 |
F-Score7
WACC7.02%
ROIC/WACC1.19
Cap/Depr(3y)104.08%
Cap/Depr(5y)129.71%
Cap/Sales(3y)3.85%
Cap/Sales(5y)4.42%
Profit Quality(3y)146.47%
Profit Quality(5y)125.36%
High Growth Momentum
Growth
EPS 1Y (TTM)31.39%
EPS 3Y25.91%
EPS 5Y10.88%
EPS Q2Q%25.69%
EPS Next Y13.28%
EPS Next 2Y14.72%
EPS Next 3Y15.11%
EPS Next 5Y14.58%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%8.69%
Revenue Next Year10.6%
Revenue Next 2Y11.28%
Revenue Next 3Y11.21%
Revenue Next 5Y12.62%
EBIT growth 1Y53.84%
EBIT growth 3Y39.33%
EBIT growth 5Y13.34%
EBIT Next Year40.38%
EBIT Next 3Y20.57%
EBIT Next 5Y19.28%
FCF growth 1Y49.73%
FCF growth 3Y55.02%
FCF growth 5Y9.34%
OCF growth 1Y40.04%
OCF growth 3Y25.17%
OCF growth 5Y10.63%