TENCENT MUSIC ENTERTAINM-ADR (TME) Stock Fundamental Analysis
NYSE:TME - New York Stock Exchange, Inc. - US88034P1093 - ADR - Currency: USD
TME gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 73 industry peers in the Entertainment industry. TME has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. TME has a decent growth rate and is not valued too expensively. With these ratings, TME could be worth investigating further for 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.
In the past 5 years TME has always 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 87.67% of the companies in the same industry.
TME has a better Return On Equity (9.79%) than 79.45% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.35%, TME belongs to the top of the industry, outperforming 82.19% of the companies in the same industry.
TME had an Average Return On Invested Capital over the past 3 years of 6.52%. This is significantly below the industry average of 23.23%.
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 94.52% of its industry peers.
In the last couple of years the Profit Margin of TME has grown nicely.
TME has a better Operating Margin (25.88%) than 94.52% of its industry peers.
TME's Operating Margin has improved in the last couple of years.
TME has a Gross Margin of 42.34%. This is comparable to the rest of the industry: TME outperforms 46.58% of its industry peers.
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.
Compared to 1 year ago, TME has less shares outstanding
Compared to 5 years ago, TME has less shares outstanding
TME has a better debt/assets ratio than last year.
2.2 Solvency
TME has an Altman-Z score of 7.95. This indicates that TME is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of TME (7.95) is better than 90.41% 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.
The Debt to FCF ratio of TME (0.65) is better than 87.67% 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.
TME has a better Debt to Equity ratio (0.06) than 64.38% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.06 | ||
| Debt/FCF | 0.65 | ||
| Altman-Z | 7.95 |
ROIC/WACC1.19
WACC7.04%
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.
With a decent Current ratio value of 2.09, TME is doing good in the industry, outperforming 79.45% 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.
TME has a Quick ratio of 2.09. This is amongst the best in the industry. TME outperforms 80.82% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.09 | ||
| Quick Ratio | 2.09 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 31.39% over the past year.
The Earnings Per Share has been growing by 10.88% on average over the past years. This is quite good.
Looking at the last year, TME shows a small growth in Revenue. The Revenue has grown by 5.35% 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)5.35%
Revenue growth 3Y-3.13%
Revenue growth 5Y2.23%
Sales Q2Q%8.69%
3.2 Future
Based on estimates for the next years, TME will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.58% on average per year.
Based on estimates for the next years, TME will show a quite strong growth in Revenue. The Revenue will grow by 12.62% on average per year.
EPS Next Y13.28%
EPS Next 2Y14.72%
EPS Next 3Y15.11%
EPS Next 5Y14.58%
Revenue Next Year10.59%
Revenue Next 2Y11.25%
Revenue Next 3Y11.17%
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
The Price/Earnings ratio is 30.74, which means the current valuation is very expensive for TME.
Based on the Price/Earnings ratio, TME is valued a bit cheaper than the industry average as 79.45% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of TME to the average of the S&P500 Index (26.51), we can say TME is valued inline with the index average.
The Price/Forward Earnings ratio is 24.60, which indicates a rather expensive current valuation of TME.
69.86% of the companies in the same industry are more expensive than TME, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 34.09, TME is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.74 | ||
| Fwd PE | 24.6 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, TME is valued a bit cheaper than the industry average as 60.27% of the companies are valued more expensively.
TME's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. TME is cheaper than 75.34% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.5 | ||
| EV/EBITDA | 25.19 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates TME does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of TME 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)2.31
PEG (5Y)2.83
EPS Next 2Y14.72%
EPS Next 3Y15.11%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.40%, TME has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 6.69, TME pays a better dividend. On top of this TME pays more dividend than 89.04% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, TME's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.4% |
5.2 History
TME does not have a reliable dividend history as it only pays dividend since a couple or years.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
TME pays out 22.70% of its income as dividend. This is a sustainable payout ratio.
DP22.7%
EPS Next 2Y14.72%
EPS Next 3Y15.11%
22.13
+0.16 (+0.73%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners76.15%
Inst Owner Change-2.45%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap34.10B
Analysts81.21
Price Target19.66 (-11.16%)
Short Float %6.29%
Short Ratio3.44
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.4% |
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)5.2%
PT rev (3m)19.1%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0.14%
EPS NY rev (1m)0%
EPS NY rev (3m)-3.1%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)0.03%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.86%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.74 | ||
| Fwd PE | 24.6 | ||
| P/S | 8.63 | ||
| P/FCF | 26.5 | ||
| P/OCF | 23.84 | ||
| P/B | 3.61 | ||
| P/tB | 5.31 | ||
| EV/EBITDA | 25.19 |
EPS(TTM)0.72
EY3.25%
EPS(NY)0.9
Fwd EY4.06%
FCF(TTM)0.83
FCFY3.77%
OCF(TTM)0.93
OCFY4.19%
SpS2.57
BVpS6.13
TBVpS4.17
PEG (NY)2.31
PEG (5Y)2.83
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 | 7.95 |
F-Score7
WACC7.04%
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 Year10.59%
Revenue Next 2Y11.25%
Revenue Next 3Y11.17%
Revenue Next 5Y12.62%
EBIT growth 1Y53.84%
EBIT growth 3Y39.33%
EBIT growth 5Y13.34%
EBIT Next Year42.99%
EBIT Next 3Y21.58%
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%