TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
NYSE:TME - New York Stock Exchange, Inc. - US88034P1093 - ADR - Currency: USD
We assign a fundamental rating of 7 out of 10 to TME. TME was compared to 71 industry peers in the Entertainment industry. TME scores excellent points on both the profitability and health parts. This is a solid base for a good stock. TME is not valued too expensively and it also shows a decent growth rate. These ratings could make TME a good candidate 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
With an excellent Return On Assets value of 7.35%, TME belongs to the best of the industry, outperforming 88.73% of the companies in the same industry.
TME has a better Return On Equity (9.79%) than 83.10% of its industry peers.
TME's Return On Invested Capital of 8.35% is amongst the best of the industry. TME outperforms 83.10% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for TME is significantly below the industry average of 23.28%.
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
TME's Profit Margin of 23.39% is amongst the best of the industry. TME outperforms 95.77% of its industry peers.
In the last couple of years the Profit Margin of TME has grown nicely.
With an excellent Operating Margin value of 25.88%, TME belongs to the best of the industry, outperforming 94.37% of the companies in the same industry.
TME's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 42.34%, TME perfoms like the industry average, outperforming 43.66% of the companies in the same 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), TME is creating some value.
The number of shares outstanding for TME has been reduced compared to 1 year ago.
Compared to 5 years ago, TME has less shares outstanding
Compared to 1 year ago, TME has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 6.43 indicates that TME is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 6.43, TME belongs to the best of the industry, outperforming 90.14% of the companies in the same industry.
The Debt to FCF ratio of TME is 0.65, which is an excellent value as it means it would take TME, only 0.65 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 0.65, TME belongs to the best of the industry, outperforming 84.51% of the companies in the same industry.
TME has a Debt/Equity ratio of 0.06. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of TME (0.06) is better than 69.01% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.65 | ||
| Altman-Z | 6.43 |
ROIC/WACC1.12
WACC7.44%
2.3 Liquidity
A Current Ratio of 2.09 indicates that TME has no problem at all paying its short term obligations.
With a decent Current ratio value of 2.09, TME is doing good in the industry, outperforming 77.46% 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 has a better Quick ratio (2.09) than 78.87% 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.
Looking at the last year, TME shows a small growth in Revenue. The Revenue has grown by 2.34% in the last year.
The Revenue has been growing slightly by 2.23% on average over the past years.
EPS 1Y (TTM)31.39%
EPS 3Y25.91%
EPS 5Y10.88%
EPS Q2Q%25.69%
Revenue 1Y (TTM)2.34%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%8.69%
3.2 Future
The Earnings Per Share is expected to grow by 13.28% on average over the next years. This is quite good.
The Revenue is expected to grow by 10.39% on average over the next years. This is quite good.
EPS Next Y14.44%
EPS Next 2Y13.98%
EPS Next 3Y14.34%
EPS Next 5Y13.28%
Revenue Next Year10.08%
Revenue Next 2Y10.22%
Revenue Next 3Y10.08%
Revenue Next 5Y10.39%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 24.33, the valuation of TME can be described as rather expensive.
Compared to the rest of the industry, the Price/Earnings ratio of TME indicates a rather cheap valuation: TME is cheaper than 81.69% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of TME to the average of the S&P500 Index (25.82), we can say TME is valued inline with the index average.
TME is valuated rather expensively with a Price/Forward Earnings ratio of 19.79.
TME's Price/Forward Earnings ratio is rather cheap when compared to the industry. TME is cheaper than 80.28% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, TME is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.33 | ||
| Fwd PE | 19.79 |
4.2 Price Multiples
66.20% of the companies in the same industry are more expensive than TME, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, TME is valued a bit cheaper than 74.65% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.04 | ||
| EV/EBITDA | 18.34 |
4.3 Compensation for Growth
TME's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of TME may justify a higher PE ratio.
A more expensive valuation may be justified as TME's earnings are expected to grow with 14.34% in the coming years.
PEG (NY)1.69
PEG (5Y)2.24
EPS Next 2Y13.98%
EPS Next 3Y14.34%
5. Dividend
5.1 Amount
TME has a Yearly Dividend Yield of 1.81%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 6.63, TME pays a better dividend. On top of this TME pays more dividend than 88.73% of the companies listed in the same industry.
TME's Dividend Yield is slightly below the S&P500 average, which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.81% |
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 Years0
Div Non Decr Years0
5.3 Sustainability
TME pays out 22.70% of its income as dividend. This is a sustainable payout ratio.
DP22.7%
EPS Next 2Y13.98%
EPS Next 3Y14.34%
17.52
+0.59 (+3.48%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners57.71%
Inst Owner Change7.41%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap27.00B
Analysts83.03
Price Target16.5 (-5.82%)
Short Float %6.29%
Short Ratio2.83
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.81% |
Yearly Dividend0.13
Dividend Growth(5Y)N/A
DP22.7%
Div Incr Years0
Div Non Decr Years0
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)1.7%
PT rev (3m)12.66%
EPS NQ rev (1m)-0.05%
EPS NQ rev (3m)2.76%
EPS NY rev (1m)-2.11%
EPS NY rev (3m)4.12%
Revenue NQ rev (1m)-0.31%
Revenue NQ rev (3m)0.49%
Revenue NY rev (1m)0.34%
Revenue NY rev (3m)0.5%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.33 | ||
| Fwd PE | 19.79 | ||
| P/S | 6.85 | ||
| P/FCF | 21.04 | ||
| P/OCF | 18.93 | ||
| P/B | 2.87 | ||
| P/tB | 4.21 | ||
| EV/EBITDA | 18.34 |
EPS(TTM)0.72
EY4.11%
EPS(NY)0.89
Fwd EY5.05%
FCF(TTM)0.83
FCFY4.75%
OCF(TTM)0.93
OCFY5.28%
SpS2.56
BVpS6.11
TBVpS4.16
PEG (NY)1.69
PEG (5Y)2.24
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 | 6.43 |
F-Score7
WACC7.44%
ROIC/WACC1.12
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 Y14.44%
EPS Next 2Y13.98%
EPS Next 3Y14.34%
EPS Next 5Y13.28%
Revenue 1Y (TTM)2.34%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%8.69%
Revenue Next Year10.08%
Revenue Next 2Y10.22%
Revenue Next 3Y10.08%
Revenue Next 5Y10.39%
EBIT growth 1Y53.84%
EBIT growth 3Y39.33%
EBIT growth 5Y13.34%
EBIT Next Year35.22%
EBIT Next 3Y20.48%
EBIT Next 5Y16.77%
FCF growth 1Y49.73%
FCF growth 3Y55.02%
FCF growth 5Y9.34%
OCF growth 1Y40.04%
OCF growth 3Y25.17%
OCF growth 5Y10.63%