TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
USA - NYSE:TME - US88034P1093 - ADR
23.63 USD
+0.07 (+0.3%)
23.64 USD
+0.01 (+0.04%)
We assign a fundamental rating of 7 out of 10 to TME. TME was compared to 80 industry peers in the Entertainment industry. TME gets an excellent profitability rating and is at the same time showing great financial health properties. TME is growing strongly while it is still valued neutral. This is a good combination! With these ratings, TME could be worth investigating further for growth and quality investing!.
1. Profitability
1.1 Basic Checks
In the past year TME was profitable.
TME had a positive operating cash flow in the past year.
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
Looking at the Return On Assets, with a value of 11.32%, TME belongs to the top of the industry, outperforming 91.25% of the companies in the same industry.
Looking at the Return On Equity, with a value of 15.09%, TME belongs to the top of the industry, outperforming 86.25% of the companies in the same industry.
With an excellent Return On Invested Capital value of 9.71%, TME belongs to the best of the industry, outperforming 85.00% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for TME is below the industry average of 9.25%.
The 3 year average ROIC (6.52%) for TME is below the current ROIC(9.71%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.32% | ||
| ROE | 15.09% | ||
| ROIC | 9.71% |
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 33.83% is amongst the best of the industry. TME outperforms 100.00% of its industry peers.
TME's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 28.23%, TME belongs to the top of the industry, outperforming 96.25% of the companies in the same industry.
In the last couple of years the Operating Margin of TME has grown nicely.
TME's Gross Margin of 43.72% is in line compared to the rest of the industry. TME outperforms 50.00% of its industry peers.
In the last couple of years the Gross Margin of TME has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 28.23% | ||
| PM (TTM) | 33.83% | ||
| GM | 43.72% |
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.
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
TME has an Altman-Z score of 8.41. This indicates that TME is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of TME (8.41) is better than 92.50% of its industry peers.
TME has a debt to FCF ratio of 0.69. This is a very positive value and a sign of high solvency as it would only need 0.69 years to pay back of all of its debts.
TME's Debt to FCF ratio of 0.69 is amongst the best of the industry. TME outperforms 86.25% of its industry peers.
A Debt/Equity ratio of 0.06 indicates that TME is not too dependend on debt financing.
TME has a Debt to Equity ratio of 0.06. This is in the better half of the industry: TME outperforms 65.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.69 | ||
| Altman-Z | 8.41 |
ROIC/WACC1.38
WACC7.06%
2.3 Liquidity
TME has a Current Ratio of 2.09. This indicates that TME is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 2.09, TME is in the better half of the industry, outperforming 75.00% 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 Quick ratio of 2.09. This is in the better half of the industry: TME outperforms 76.25% 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 35.73%, which is quite impressive.
TME shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.88% yearly.
The Revenue has grown by 10.52% in the past year. This is quite good.
TME shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 2.23% yearly.
EPS 1Y (TTM)35.73%
EPS 3Y25.91%
EPS 5Y10.88%
EPS Q2Q%39.5%
Revenue 1Y (TTM)10.52%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%17.91%
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 17.12% yearly.
TME is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.09% yearly.
EPS Next Y18.01%
EPS Next 2Y18.3%
EPS Next 3Y17.39%
EPS Next 5Y17.12%
Revenue Next Year14.32%
Revenue Next 2Y14.28%
Revenue Next 3Y13.42%
Revenue Next 5Y15.09%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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 29.91.
TME's Price/Earnings ratio is rather cheap when compared to the industry. TME is cheaper than 81.25% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.54. TME is around the same levels.
With a Price/Forward Earnings ratio of 24.55, TME is valued on the expensive side.
Based on the Price/Forward Earnings ratio, TME is valued a bit cheaper than the industry average as 77.50% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.05, TME is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.91 | ||
| Fwd PE | 24.55 |
4.2 Price Multiples
63.75% 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 cheaper than 82.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.53 | ||
| EV/EBITDA | 23.6 |
4.3 Compensation for Growth
The 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 17.39% in the coming years.
PEG (NY)1.66
PEG (5Y)2.75
EPS Next 2Y18.3%
EPS Next 3Y17.39%
5. Dividend
5.1 Amount
TME has a Yearly Dividend Yield of 1.30%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 21.21, TME pays a better dividend. On top of this TME pays more dividend than 88.75% of the companies listed in the same industry.
With a Dividend Yield of 1.30, TME pays less dividend than the S&P500 average, which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.3% |
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
DPN/A
EPS Next 2Y18.3%
EPS Next 3Y17.39%
23.63
+0.07 (+0.3%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners67.61%
Inst Owner Change-7.15%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap36.41B
Analysts81.18
Price Target27.64 (16.97%)
Short Float %5.75%
Short Ratio3.01
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.3% |
Yearly Dividend0.13
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)7.25%
Min EPS beat(2)2.25%
Max EPS beat(2)12.25%
EPS beat(4)3
Avg EPS beat(4)5.56%
Min EPS beat(4)-4.78%
Max EPS beat(4)12.53%
EPS beat(8)7
Avg EPS beat(8)3.76%
EPS beat(12)10
Avg EPS beat(12)5.02%
EPS beat(16)13
Avg EPS beat(16)6.05%
Revenue beat(2)2
Avg Revenue beat(2)2.56%
Min Revenue beat(2)0.15%
Max Revenue beat(2)4.97%
Revenue beat(4)3
Avg Revenue beat(4)1.24%
Min Revenue beat(4)-1.38%
Max Revenue beat(4)4.97%
Revenue beat(8)6
Avg Revenue beat(8)1.28%
Revenue beat(12)9
Avg Revenue beat(12)1.13%
Revenue beat(16)10
Avg Revenue beat(16)0.84%
PT rev (1m)6.03%
PT rev (3m)47.96%
EPS NQ rev (1m)-0.15%
EPS NQ rev (3m)5.76%
EPS NY rev (1m)0.06%
EPS NY rev (3m)4.17%
Revenue NQ rev (1m)0.04%
Revenue NQ rev (3m)4.98%
Revenue NY rev (1m)0.09%
Revenue NY rev (3m)3.44%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.91 | ||
| Fwd PE | 24.55 | ||
| P/S | 8.59 | ||
| P/FCF | 29.53 | ||
| P/OCF | 29.53 | ||
| P/B | 3.83 | ||
| P/tB | 5.63 | ||
| EV/EBITDA | 23.6 |
EPS(TTM)0.79
EY3.34%
EPS(NY)0.96
Fwd EY4.07%
FCF(TTM)0.8
FCFY3.39%
OCF(TTM)0.8
OCFY3.39%
SpS2.75
BVpS6.17
TBVpS4.2
PEG (NY)1.66
PEG (5Y)2.75
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.32% | ||
| ROE | 15.09% | ||
| ROCE | 11.56% | ||
| ROIC | 9.71% | ||
| ROICexc | 15.37% | ||
| ROICexgc | 28.71% | ||
| OM | 28.23% | ||
| PM (TTM) | 33.83% | ||
| GM | 43.72% | ||
| FCFM | 29.08% |
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-Score5
Asset Turnover0.33
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.69 | ||
| Debt/EBITDA | 0.4 | ||
| Cap/Depr | N/A | ||
| Cap/Sales | N/A | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 92.44% | ||
| Profit Quality | 85.96% | ||
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 | ||
| Altman-Z | 8.41 |
F-Score5
WACC7.06%
ROIC/WACC1.38
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)35.73%
EPS 3Y25.91%
EPS 5Y10.88%
EPS Q2Q%39.5%
EPS Next Y18.01%
EPS Next 2Y18.3%
EPS Next 3Y17.39%
EPS Next 5Y17.12%
Revenue 1Y (TTM)10.52%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%17.91%
Revenue Next Year14.32%
Revenue Next 2Y14.28%
Revenue Next 3Y13.42%
Revenue Next 5Y15.09%
EBIT growth 1Y43.69%
EBIT growth 3Y39.33%
EBIT growth 5Y13.34%
EBIT Next Year50.31%
EBIT Next 3Y25.28%
EBIT Next 5Y22.59%
FCF growth 1Y14.83%
FCF growth 3Y55.02%
FCF growth 5Y9.34%
OCF growth 1Y14.83%
OCF growth 3Y25.17%
OCF growth 5Y10.63%