TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
USA - NYSE:TME - US88034P1093 - ADR
22.82 USD
+0.11 (+0.48%)
22.9775 USD
+0.16 (+0.69%)
Overall TME gets a fundamental rating of 7 out of 10. We evaluated TME against 80 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 showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! These ratings would make TME suitable for growth and 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.
TME had positive earnings in each of the past 5 years.
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 90.00% of the companies in the same industry.
TME has a better Return On Equity (15.09%) than 83.75% of its industry peers.
TME's Return On Invested Capital of 9.71% is amongst the best of the industry. TME outperforms 85.00% of its industry peers.
The Average Return On Invested Capital over the past 3 years for TME is below the industry average of 9.23%.
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
Looking at the Profit Margin, with a value of 33.83%, TME belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
In the last couple of years the Profit Margin of TME has grown nicely.
TME has a better Operating Margin (28.23%) than 96.25% of its industry peers.
In the last couple of years the Operating Margin of TME has grown nicely.
With a Gross Margin value of 43.72%, TME perfoms like the industry average, outperforming 51.25% of the companies in the same industry.
TME's Gross Margin has improved in the last couple of years.
| 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.
Compared to 1 year ago, TME has less shares outstanding
TME has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, TME has an improved debt to assets ratio.
2.2 Solvency
TME has an Altman-Z score of 8.13. This indicates that TME is financially healthy and has little risk of bankruptcy at the moment.
TME has a Altman-Z score of 8.13. This is amongst the best in the industry. TME outperforms 88.75% of its industry peers.
The Debt to FCF ratio of TME is 0.69, which is an excellent value as it means it would take TME, only 0.69 years of fcf income to pay off all of its debts.
TME has a better Debt to FCF ratio (0.69) than 85.00% of its industry peers.
TME has a Debt/Equity ratio of 0.06. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.06, TME is in the better half of the industry, outperforming 65.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.69 | ||
| Altman-Z | 8.13 |
ROIC/WACC1.38
WACC7.05%
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.
A Quick Ratio of 2.09 indicates that TME has no problem at all paying its short term obligations.
The Quick ratio of TME (2.09) is better than 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.
TME shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 10.52%.
The Revenue has been growing slightly by 2.23% on average over the past years.
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
The Earnings Per Share is expected to grow by 17.09% on average over the next years. This is quite good.
TME is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.27% yearly.
EPS Next Y18.01%
EPS Next 2Y18.3%
EPS Next 3Y17.39%
EPS Next 5Y17.09%
Revenue Next Year14.32%
Revenue Next 2Y14.28%
Revenue Next 3Y13.42%
Revenue Next 5Y15.27%
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
Based on the Price/Earnings ratio of 28.89, the valuation of TME can be described as expensive.
Based on the Price/Earnings ratio, TME is valued a bit cheaper than the industry average as 78.75% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of TME to the average of the S&P500 Index (27.67), we can say TME is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 23.67, the valuation of TME can be described as rather expensive.
Based on the Price/Forward Earnings ratio, TME is valued a bit cheaper than the industry average as 78.75% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.33, TME is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.89 | ||
| Fwd PE | 23.67 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as TME.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TME indicates a somewhat cheap valuation: TME is cheaper than 78.75% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.47 | ||
| EV/EBITDA | 22.49 |
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 17.39% in the coming years.
PEG (NY)1.6
PEG (5Y)2.66
EPS Next 2Y18.3%
EPS Next 3Y17.39%
5. Dividend
5.1 Amount
TME has a Yearly Dividend Yield of 1.36%.
Compared to an average industry Dividend Yield of 38.93, TME pays a better dividend. On top of this TME pays more dividend than 88.75% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.35, TME's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.36% |
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%
22.82
+0.11 (+0.48%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners67.61%
Inst Owner Change-0.14%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap35.16B
Revenue(TTM)30.27B
Net Income(TTM)10.24B
Analysts81.18
Price Target28 (22.7%)
Short Float %5.28%
Short Ratio2.8
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.36% |
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)1.3%
PT rev (3m)45.43%
EPS NQ rev (1m)0%
EPS NQ rev (3m)5.48%
EPS NY rev (1m)0.06%
EPS NY rev (3m)4.17%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)4.73%
Revenue NY rev (1m)0%
Revenue NY rev (3m)3.37%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.89 | ||
| Fwd PE | 23.67 | ||
| P/S | 8.28 | ||
| P/FCF | 28.47 | ||
| P/OCF | 28.47 | ||
| P/B | 3.69 | ||
| P/tB | 5.43 | ||
| EV/EBITDA | 22.49 |
EPS(TTM)0.79
EY3.46%
EPS(NY)0.96
Fwd EY4.23%
FCF(TTM)0.8
FCFY3.51%
OCF(TTM)0.8
OCFY3.51%
SpS2.76
BVpS6.18
TBVpS4.2
PEG (NY)1.6
PEG (5Y)2.66
Graham Number10.48
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%
ROICexgc growth 3Y16.02%
ROICexgc 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 | 8.13 |
F-Score5
WACC7.05%
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 5Y17.09%
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 5Y15.27%
EBIT growth 1Y43.69%
EBIT growth 3Y39.33%
EBIT growth 5Y13.34%
EBIT Next Year50.31%
EBIT Next 3Y25.28%
EBIT Next 5Y22.78%
FCF growth 1Y14.83%
FCF growth 3Y55.02%
FCF growth 5Y9.34%
OCF growth 1Y14.83%
OCF growth 3Y25.17%
OCF growth 5Y10.63%