WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
NASDAQ:WMG - Nasdaq - US9345502036 - Common Stock - Currency: USD
Taking everything into account, WMG scores 4 out of 10 in our fundamental rating. WMG was compared to 72 industry peers in the Entertainment industry. While WMG belongs to the best of the industry regarding profitability, there are concerns on its financial health. WMG is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year WMG was profitable.
WMG had a positive operating cash flow in the past year.
Of the past 5 years WMG 4 years were profitable.
In the past 5 years WMG always reported a positive cash flow from operatings.
1.2 Ratios
WMG's Return On Assets of 4.66% is amongst the best of the industry. WMG outperforms 81.94% of its industry peers.
WMG's Return On Equity of 78.66% is amongst the best of the industry. WMG outperforms 97.22% of its industry peers.
Looking at the Return On Invested Capital, with a value of 11.44%, WMG belongs to the top of the industry, outperforming 90.28% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for WMG is significantly below the industry average of 22.90%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.66% | ||
| ROE | 78.66% | ||
| ROIC | 11.44% |
ROA(3y)5.53%
ROA(5y)2.67%
ROE(3y)192.94%
ROE(5y)N/A
ROIC(3y)12.68%
ROIC(5y)N/A
1.3 Margins
WMG's Profit Margin of 7.04% is amongst the best of the industry. WMG outperforms 81.94% of its industry peers.
WMG's Profit Margin has improved in the last couple of years.
The Operating Margin of WMG (13.47%) is better than 81.94% of its industry peers.
WMG's Operating Margin has improved in the last couple of years.
WMG has a Gross Margin (46.81%) which is comparable to the rest of the industry.
WMG's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.47% | ||
| PM (TTM) | 7.04% | ||
| GM | 46.81% |
OM growth 3Y9.45%
OM growth 5Y13.62%
PM growth 3Y5.66%
PM growth 5Y3.14%
GM growth 3Y-0.34%
GM growth 5Y0.62%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), WMG is creating some value.
Compared to 1 year ago, WMG has more shares outstanding
The number of shares outstanding for WMG has been increased compared to 5 years ago.
WMG has a better debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.62, we must say that WMG is in the distress zone and has some risk of bankruptcy.
WMG has a Altman-Z score (1.62) which is comparable to the rest of the industry.
The Debt to FCF ratio of WMG is 8.02, which is on the high side as it means it would take WMG, 8.02 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 8.02, WMG is doing good in the industry, outperforming 63.89% of the companies in the same industry.
A Debt/Equity ratio of 7.57 is on the high side and indicates that WMG has dependencies on debt financing.
WMG has a Debt to Equity ratio of 7.57. This is in the lower half of the industry: WMG underperforms 77.78% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.57 | ||
| Debt/FCF | 8.02 | ||
| Altman-Z | 1.62 |
ROIC/WACC1.48
WACC7.73%
2.3 Liquidity
A Current Ratio of 0.66 indicates that WMG may have some problems paying its short term obligations.
WMG has a Current ratio of 0.66. This is in the lower half of the industry: WMG underperforms 69.44% of its industry peers.
A Quick Ratio of 0.64 indicates that WMG may have some problems paying its short term obligations.
With a Quick ratio value of 0.64, WMG is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.66 | ||
| Quick Ratio | 0.64 |
3. Growth
3.1 Past
WMG shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -28.68%.
WMG shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.64% yearly.
Looking at the last year, WMG shows a decrease in Revenue. The Revenue has decreased by -0.91% in the last year.
WMG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.51% yearly.
EPS 1Y (TTM)-28.68%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-82.05%
Revenue 1Y (TTM)-0.91%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%-0.67%
3.2 Future
WMG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.49% yearly.
Based on estimates for the next years, WMG will show a small growth in Revenue. The Revenue will grow by 4.35% on average per year.
EPS Next Y2.44%
EPS Next 2Y10.33%
EPS Next 3Y11.88%
EPS Next 5Y11.49%
Revenue Next Year0.22%
Revenue Next 2Y2.91%
Revenue Next 3Y3.81%
Revenue Next 5Y4.35%
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 stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 31.68, the valuation of WMG can be described as expensive.
WMG's Price/Earnings ratio is a bit cheaper when compared to the industry. WMG is cheaper than 77.78% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.28. WMG is around the same levels.
With a Price/Forward Earnings ratio of 21.38, WMG is valued on the expensive side.
Based on the Price/Forward Earnings ratio, WMG is valued a bit cheaper than the industry average as 76.39% of the companies are valued more expensively.
WMG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.68 | ||
| Fwd PE | 21.38 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WMG is valued a bit cheaper than the industry average as 70.83% of the companies are valued more expensively.
WMG's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. WMG is cheaper than 72.22% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.4 | ||
| EV/EBITDA | 15.81 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates WMG does not grow enough to justify the current Price/Earnings ratio.
WMG has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)12.97
PEG (5Y)2.98
EPS Next 2Y10.33%
EPS Next 3Y11.88%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.71%.
WMG's Dividend Yield is rather good when compared to the industry average which is at 6.64. WMG pays more dividend than 91.67% of the companies in the same industry.
WMG's Dividend Yield is comparable with the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.71% |
5.2 History
The dividend of WMG is nicely growing with an annual growth rate of 30.53%!
WMG has been paying a dividend for over 5 years, so it has already some track record.
WMG has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)30.53%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
83.41% of the earnings are spent on dividend by WMG. This is not a sustainable payout ratio.
The dividend of WMG is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP83.41%
EPS Next 2Y10.33%
EPS Next 3Y11.88%
29.15
+1.32 (+4.74%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners105.9%
Inst Owner Change4.29%
Ins Owners1.3%
Ins Owner Change7.36%
Market Cap15.20B
Analysts74.17
Price Target33.61 (15.3%)
Short Float %3.49%
Short Ratio3.28
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.71% |
Yearly Dividend0.7
Dividend Growth(5Y)30.53%
DP83.41%
Div Incr Years4
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-21.77%
Min EPS beat(2)-74.67%
Max EPS beat(2)31.13%
EPS beat(4)2
Avg EPS beat(4)-24.21%
Min EPS beat(4)-74.67%
Max EPS beat(4)31.13%
EPS beat(8)5
Avg EPS beat(8)-0.98%
EPS beat(12)7
Avg EPS beat(12)4.3%
EPS beat(16)8
Avg EPS beat(16)-1.53%
Revenue beat(2)0
Avg Revenue beat(2)-1.9%
Min Revenue beat(2)-3.26%
Max Revenue beat(2)-0.54%
Revenue beat(4)1
Avg Revenue beat(4)-1%
Min Revenue beat(4)-3.26%
Max Revenue beat(4)1.43%
Revenue beat(8)3
Avg Revenue beat(8)0.55%
Revenue beat(12)6
Avg Revenue beat(12)0.79%
Revenue beat(16)10
Avg Revenue beat(16)1.77%
PT rev (1m)-5.58%
PT rev (3m)-8.5%
EPS NQ rev (1m)4.72%
EPS NQ rev (3m)-9.03%
EPS NY rev (1m)-7.97%
EPS NY rev (3m)-19.48%
Revenue NQ rev (1m)0.19%
Revenue NQ rev (3m)-1.89%
Revenue NY rev (1m)-0.48%
Revenue NY rev (3m)-1.45%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.68 | ||
| Fwd PE | 21.38 | ||
| P/S | 2.4 | ||
| P/FCF | 28.4 | ||
| P/OCF | 17.02 | ||
| P/B | 26.8 | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.81 |
EPS(TTM)0.92
EY3.16%
EPS(NY)1.36
Fwd EY4.68%
FCF(TTM)1.03
FCFY3.52%
OCF(TTM)1.71
OCFY5.88%
SpS12.15
BVpS1.09
TBVpS-8.4
PEG (NY)12.97
PEG (5Y)2.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.66% | ||
| ROE | 78.66% | ||
| ROCE | 15.09% | ||
| ROIC | 11.44% | ||
| ROICexc | 12.89% | ||
| ROICexgc | 937.18% | ||
| OM | 13.47% | ||
| PM (TTM) | 7.04% | ||
| GM | 46.81% | ||
| FCFM | 8.45% |
ROA(3y)5.53%
ROA(5y)2.67%
ROE(3y)192.94%
ROE(5y)N/A
ROIC(3y)12.68%
ROIC(5y)N/A
ROICexc(3y)14.58%
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)16.73%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y7.45%
ROICexc growth 5Y8.97%
OM growth 3Y9.45%
OM growth 5Y13.62%
PM growth 3Y5.66%
PM growth 5Y3.14%
GM growth 3Y-0.34%
GM growth 5Y0.62%
F-Score4
Asset Turnover0.66
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.57 | ||
| Debt/FCF | 8.02 | ||
| Debt/EBITDA | 3.6 | ||
| Cap/Depr | 105.61% | ||
| Cap/Sales | 5.65% | ||
| Interest Coverage | 5.2 | ||
| Cash Conversion | 74.92% | ||
| Profit Quality | 119.96% | ||
| Current Ratio | 0.66 | ||
| Quick Ratio | 0.64 | ||
| Altman-Z | 1.62 |
F-Score4
WACC7.73%
ROIC/WACC1.48
Cap/Depr(3y)87.14%
Cap/Depr(5y)99.38%
Cap/Sales(3y)4.74%
Cap/Sales(5y)5.57%
Profit Quality(3y)95.6%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-28.68%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-82.05%
EPS Next Y2.44%
EPS Next 2Y10.33%
EPS Next 3Y11.88%
EPS Next 5Y11.49%
Revenue 1Y (TTM)-0.91%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%-0.67%
Revenue Next Year0.22%
Revenue Next 2Y2.91%
Revenue Next 3Y3.81%
Revenue Next 5Y4.35%
EBIT growth 1Y-8.96%
EBIT growth 3Y16.7%
EBIT growth 5Y22.15%
EBIT Next Year35.85%
EBIT Next 3Y18.54%
EBIT Next 5Y13.81%
FCF growth 1Y-7.6%
FCF growth 3Y91.72%
FCF growth 5Y12.08%
OCF growth 1Y15.67%
OCF growth 3Y5.73%
OCF growth 5Y13.52%