WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
USA - NASDAQ:WMG - US9345502036 - Common Stock
32.32 USD
-0.5 (-1.52%)
32.32 USD
0 (0%)
We assign a fundamental rating of 4 out of 10 to WMG. WMG was compared to 80 industry peers in the Entertainment industry. WMG has an excellent profitability rating, but there are concerns on its financial health. WMG is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year WMG was profitable.
In the past year WMG had a positive cash flow from operations.
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 3.00% is fine compared to the rest of the industry. WMG outperforms 73.75% of its industry peers.
With an excellent Return On Equity value of 49.75%, WMG belongs to the best of the industry, outperforming 96.25% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 11.70%, WMG belongs to the top of the industry, outperforming 88.75% of the companies in the same industry.
WMG had an Average Return On Invested Capital over the past 3 years of 12.68%. This is above the industry average of 9.25%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3% | ||
| ROE | 49.75% | ||
| ROIC | 11.7% |
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 has a Profit Margin of 4.53%. This is in the better half of the industry: WMG outperforms 70.00% of its industry peers.
WMG's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 13.67%, WMG belongs to the best of the industry, outperforming 82.50% of the companies in the same industry.
In the last couple of years the Operating Margin of WMG has grown nicely.
With a Gross Margin value of 46.64%, WMG perfoms like the industry average, outperforming 56.25% of the companies in the same industry.
WMG's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.67% | ||
| PM (TTM) | 4.53% | ||
| GM | 46.64% |
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.
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 1.72. This is a bad value and indicates that WMG is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.72, WMG is in line with its industry, outperforming 57.50% of the companies in the same industry.
WMG has a debt to FCF ratio of 11.16. This is a negative value and a sign of low solvency as WMG would need 11.16 years to pay back of all of its debts.
WMG has a Debt to FCF ratio (11.16) which is in line with its industry peers.
WMG has a Debt/Equity ratio of 7.41. This is a high value indicating a heavy dependency on external financing.
WMG's Debt to Equity ratio of 7.41 is on the low side compared to the rest of the industry. WMG is outperformed by 80.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.41 | ||
| Debt/FCF | 11.16 | ||
| Altman-Z | 1.72 |
ROIC/WACC1.53
WACC7.67%
2.3 Liquidity
WMG has a Current Ratio of 0.66. This is a bad value and indicates that WMG is not financially healthy enough and could expect problems in meeting its short term obligations.
WMG's Current ratio of 0.66 is on the low side compared to the rest of the industry. WMG is outperformed by 71.25% of its industry peers.
WMG has a Quick Ratio of 0.66. This is a bad value and indicates that WMG is not financially healthy enough and could expect problems in meeting its short term obligations.
WMG's Quick ratio of 0.64 is on the low side compared to the rest of the industry. WMG is outperformed by 71.25% of its industry peers.
| 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 -58.70%.
WMG shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.64% yearly.
The Revenue has been growing slightly by 1.36% in the past year.
The Revenue has been growing slightly by 7.51% on average over the past years.
EPS 1Y (TTM)-58.7%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-109.37%
Revenue 1Y (TTM)1.36%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%8.69%
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 11.84% yearly.
Based on estimates for the next years, WMG will show a small growth in Revenue. The Revenue will grow by 4.68% on average per year.
EPS Next Y-24.49%
EPS Next 2Y10.83%
EPS Next 3Y13.78%
EPS Next 5Y11.84%
Revenue Next Year2.03%
Revenue Next 2Y3.85%
Revenue Next 3Y4.46%
Revenue Next 5Y4.68%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 56.70 indicates a quite expensive valuation of WMG.
70.00% of the companies in the same industry are more expensive than WMG, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of WMG to the average of the S&P500 Index (27.08), we can say WMG is valued expensively.
A Price/Forward Earnings ratio of 23.49 indicates a rather expensive valuation of WMG.
Based on the Price/Forward Earnings ratio, WMG is valued a bit cheaper than 77.50% 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 23.09, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.7 | ||
| Fwd PE | 23.49 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WMG is valued a bit cheaper than the industry average as 63.75% of the companies are valued more expensively.
65.00% of the companies in the same industry are more expensive than WMG, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 43.09 | ||
| EV/EBITDA | 16.9 |
4.3 Compensation for Growth
The decent profitability rating of WMG may justify a higher PE ratio.
A more expensive valuation may be justified as WMG's earnings are expected to grow with 13.78% in the coming years.
PEG (NY)N/A
PEG (5Y)5.33
EPS Next 2Y10.83%
EPS Next 3Y13.78%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.28%, WMG has a reasonable but not impressive dividend return.
WMG's Dividend Yield is rather good when compared to the industry average which is at 34.93. WMG pays more dividend than 91.25% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.30, WMG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.28% |
5.2 History
On average, the dividend of WMG grows each year by 30.53%, which is quite nice.
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
WMG pays out 128.67% of its income as dividend. 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.
DP128.67%
EPS Next 2Y10.83%
EPS Next 3Y13.78%
32.32
-0.5 (-1.52%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners103.68%
Inst Owner Change0.27%
Ins Owners1.3%
Ins Owner Change2.82%
Market Cap16.85B
Revenue(TTM)6.47B
Net Income(TTM)293.00M
Analysts78.4
Price Target37.05 (14.63%)
Short Float %4.59%
Short Ratio3.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.28% |
Yearly Dividend0.7
Dividend Growth(5Y)30.53%
DP128.67%
Div Incr Years4
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-92.79%
Min EPS beat(2)-110.91%
Max EPS beat(2)-74.67%
EPS beat(4)1
Avg EPS beat(4)-56.44%
Min EPS beat(4)-110.91%
Max EPS beat(4)31.13%
EPS beat(8)4
Avg EPS beat(8)-16.68%
EPS beat(12)6
Avg EPS beat(12)-6.88%
EPS beat(16)8
Avg EPS beat(16)-7.14%
Revenue beat(2)1
Avg Revenue beat(2)0.95%
Min Revenue beat(2)-3.26%
Max Revenue beat(2)5.17%
Revenue beat(4)2
Avg Revenue beat(4)0.7%
Min Revenue beat(4)-3.26%
Max Revenue beat(4)5.17%
Revenue beat(8)3
Avg Revenue beat(8)0.54%
Revenue beat(12)6
Avg Revenue beat(12)1.19%
Revenue beat(16)10
Avg Revenue beat(16)1.46%
PT rev (1m)0%
PT rev (3m)7.68%
EPS NQ rev (1m)0.82%
EPS NQ rev (3m)9.81%
EPS NY rev (1m)0.31%
EPS NY rev (3m)-25.38%
Revenue NQ rev (1m)0.06%
Revenue NQ rev (3m)1.13%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)1.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.7 | ||
| Fwd PE | 23.49 | ||
| P/S | 2.6 | ||
| P/FCF | 43.09 | ||
| P/OCF | 22.43 | ||
| P/B | 28.6 | ||
| P/tB | N/A | ||
| EV/EBITDA | 16.9 |
EPS(TTM)0.57
EY1.76%
EPS(NY)1.38
Fwd EY4.26%
FCF(TTM)0.75
FCFY2.32%
OCF(TTM)1.44
OCFY4.46%
SpS12.41
BVpS1.13
TBVpS-8.43
PEG (NY)N/A
PEG (5Y)5.33
Graham Number3.81
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3% | ||
| ROE | 49.75% | ||
| ROCE | 15.44% | ||
| ROIC | 11.7% | ||
| ROICexc | 12.89% | ||
| ROICexgc | 307.41% | ||
| OM | 13.67% | ||
| PM (TTM) | 4.53% | ||
| GM | 46.64% | ||
| FCFM | 6.04% |
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
ROICexgc growth 3YN/A
ROICexgc 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 | 7.41 | ||
| Debt/FCF | 11.16 | ||
| Debt/EBITDA | 3.52 | ||
| Cap/Depr | 101.41% | ||
| Cap/Sales | 5.57% | ||
| Interest Coverage | 5.14 | ||
| Cash Conversion | 60.61% | ||
| Profit Quality | 133.45% | ||
| Current Ratio | 0.66 | ||
| Quick Ratio | 0.64 | ||
| Altman-Z | 1.72 |
F-Score4
WACC7.67%
ROIC/WACC1.53
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)-58.7%
EPS 3Y24.53%
EPS 5Y10.64%
EPS Q2Q%-109.37%
EPS Next Y-24.49%
EPS Next 2Y10.83%
EPS Next 3Y13.78%
EPS Next 5Y11.84%
Revenue 1Y (TTM)1.36%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%8.69%
Revenue Next Year2.03%
Revenue Next 2Y3.85%
Revenue Next 3Y4.46%
Revenue Next 5Y4.68%
EBIT growth 1Y-7.43%
EBIT growth 3Y16.7%
EBIT growth 5Y22.15%
EBIT Next Year41.46%
EBIT Next 3Y20.74%
EBIT Next 5Y14.15%
FCF growth 1Y-30.43%
FCF growth 3Y91.72%
FCF growth 5Y12.08%
OCF growth 1Y-0.53%
OCF growth 3Y5.73%
OCF growth 5Y13.52%
WARNER MUSIC GROUP CORP-CL A / WMG FAQ
What is the fundamental rating for WMG stock?
ChartMill assigns a fundamental rating of 4 / 10 to WMG.
Can you provide the valuation status for WARNER MUSIC GROUP CORP-CL A?
ChartMill assigns a valuation rating of 4 / 10 to WARNER MUSIC GROUP CORP-CL A (WMG). This can be considered as Fairly Valued.
How profitable is WARNER MUSIC GROUP CORP-CL A (WMG) stock?
WARNER MUSIC GROUP CORP-CL A (WMG) has a profitability rating of 7 / 10.
Can you provide the PE and PB ratios for WMG stock?
The Price/Earnings (PE) ratio for WARNER MUSIC GROUP CORP-CL A (WMG) is 56.7 and the Price/Book (PB) ratio is 28.6.
Can you provide the expected EPS growth for WMG stock?
The Earnings per Share (EPS) of WARNER MUSIC GROUP CORP-CL A (WMG) is expected to decline by -24.49% in the next year.