WARNER MUSIC GROUP CORP-CL A (WMG)
US9345502036 - Common Stock
Overall WMG gets a fundamental rating of 5 out of 10. We evaluated WMG against 76 industry peers in the Entertainment industry. WMG scores excellent on profitability, but there are concerns on its financial health. WMG has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
WMG had positive earnings in the past year.
WMG had a positive operating cash flow in the past year.
Of the past 5 years WMG 4 years were profitable.
WMG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
WMG's Return On Assets of 5.12% is amongst the best of the industry. WMG outperforms 86.84% of its industry peers.
WMG has a Return On Equity of 99.35%. This is amongst the best in the industry. WMG outperforms 100.00% of its industry peers.
WMG has a Return On Invested Capital of 12.64%. This is amongst the best in the industry. WMG outperforms 90.79% of its industry peers.
The Average Return On Invested Capital over the past 3 years for WMG is significantly below the industry average of 36.57%.
The 3 year average ROIC (11.46%) for WMG is below the current ROIC(12.64%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.12% | ||
| ROE | 99.35% | ||
| ROIC | 12.65% |
ROA(3y)5.36%
ROA(5y)2.58%
ROE(3y)487.92%
ROE(5y)N/A
ROIC(3y)11.46%
ROIC(5y)N/A
1.3 Margins
The Profit Margin of WMG (7.31%) is better than 81.58% of its industry peers.
WMG's Profit Margin has declined in the last couple of years.
WMG has a better Operating Margin (14.32%) than 82.89% of its industry peers.
WMG's Operating Margin has improved in the last couple of years.
WMG's Gross Margin of 47.66% is fine compared to the rest of the industry. WMG outperforms 61.84% of its industry peers.
WMG's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.32% | ||
| PM (TTM) | 7.31% | ||
| GM | 47.66% |
OM growth 3YN/A
OM growth 5Y19.26%
PM growth 3YN/A
PM growth 5Y-1.73%
GM growth 3Y-0.25%
GM growth 5Y0.68%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so WMG is still creating some value.
The number of shares outstanding for WMG has been increased compared to 1 year ago.
WMG has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, WMG has an improved debt to assets ratio.
2.2 Solvency
WMG has an Altman-Z score of 1.92. This is not the best score and indicates that WMG is in the grey zone with still only limited risk for bankruptcy at the moment.
The Altman-Z score of WMG (1.92) is better than 73.68% of its industry peers.
The Debt to FCF ratio of WMG is 8.07, which is on the high side as it means it would take WMG, 8.07 years of fcf income to pay off all of its debts.
WMG's Debt to FCF ratio of 8.07 is fine compared to the rest of the industry. WMG outperforms 71.05% of its industry peers.
A Debt/Equity ratio of 8.65 is on the high side and indicates that WMG has dependencies on debt financing.
The Debt to Equity ratio of WMG (8.65) is worse than 78.95% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 8.65 | ||
| Debt/FCF | 8.07 | ||
| Altman-Z | 1.92 |
ROIC/WACC1.56
WACC8.11%
2.3 Liquidity
WMG has a Current Ratio of 0.70. This is a bad value and indicates that WMG is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.70, WMG is not doing good in the industry: 64.47% of the companies in the same industry are doing better.
A Quick Ratio of 0.67 indicates that WMG may have some problems paying its short term obligations.
With a Quick ratio value of 0.67, WMG is not doing good in the industry: 64.47% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.7 | ||
| Quick Ratio | 0.67 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.23% over the past year.
Measured over the past 5 years, WMG shows a small growth in Earnings Per Share. The EPS has been growing by 6.45% on average per year.
WMG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.70%.
Measured over the past years, WMG shows a quite strong growth in Revenue. The Revenue has been growing by 8.55% on average per year.
EPS 1Y (TTM)3.23%
EPS 3YN/A
EPS 5Y6.45%
EPS growth Q2Q43.48%
Revenue 1Y (TTM)8.7%
Revenue growth 3Y10.59%
Revenue growth 5Y8.55%
Revenue growth Q2Q17.47%
3.2 Future
WMG is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 21.88% yearly.
The Revenue is expected to grow by 7.62% on average over the next years.
EPS Next Y36.97%
EPS Next 2Y30.94%
EPS Next 3Y24.99%
EPS Next 5Y21.88%
Revenue Next Year7.72%
Revenue Next 2Y6.25%
Revenue Next 3Y6.64%
Revenue Next 5Y7.62%
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.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
WMG is valuated quite expensively with a Price/Earnings ratio of 35.56.
Compared to the rest of the industry, the Price/Earnings ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 75.00% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of WMG to the average of the S&P500 Index (27.73), we can say WMG is valued slightly more expensively.
A Price/Forward Earnings ratio of 23.15 indicates a rather expensive valuation of WMG.
Based on the Price/Forward Earnings ratio, WMG is valued cheaper than 81.58% of the companies in the same industry.
WMG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 20.41, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.56 | ||
| Fwd PE | 23.15 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WMG is valued a bit cheaper than the industry average as 65.79% 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 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.65 | ||
| EV/EBITDA | 17 |
4.3 Compensation for Growth
WMG's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
WMG has an outstanding profitability rating, which may justify a higher PE ratio.
WMG's earnings are expected to grow with 24.99% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.96
PEG (5Y)5.52
EPS Next 2Y30.94%
EPS Next 3Y24.99%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.05%.
Compared to an average industry Dividend Yield of 6.03, WMG pays a better dividend. On top of this WMG pays more dividend than 90.79% of the companies listed in the same industry.
WMG's Dividend Yield is comparable with the S&P500 average which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.05% |
5.2 History
The dividend of WMG decreases each year by -18.31%.
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)-18.31%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
75.00% of the earnings are spent on dividend by WMG. This is not a sustainable payout ratio.
DP75%
EPS Next 2Y30.94%
EPS Next 3Y24.99%
WARNER MUSIC GROUP CORP-CL A
NASDAQ:WMG (5/3/2024, 7:26:37 PM)
After market: 34.14 0 (0%)34.14
+0.92 (+2.77%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
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Market Cap17.68B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.05% |
Dividend Growth(5Y)
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Surprises & Revisions
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.56 | ||
| Fwd PE | 23.15 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)0.96
PEG (5Y)5.52
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.12% | ||
| ROE | 99.35% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 14.32% | ||
| PM (TTM) | 7.31% | ||
| GM | 47.66% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.7
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 8.65 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.7 | ||
| Quick Ratio | 0.67 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)3.23%
EPS 3YN/A
EPS 5Y
EPS growth Q2Q
EPS Next Y36.97%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)8.7%
Revenue growth 3Y10.59%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
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