WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
USA - NASDAQ:WMG - US9345502036 - Common Stock
34.06 USD
+0.27 (+0.8%)
34.06 USD
0 (0%)
Overall WMG gets a fundamental rating of 4 out of 10. We evaluated WMG against 80 industry peers in the Entertainment industry. WMG scores excellent on profitability, but there are concerns on its financial health. WMG has a correct valuation and a medium growth rate.
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 has a better Return On Assets (3.00%) than 76.25% of its industry peers.
WMG has a better Return On Equity (49.75%) than 97.50% of its industry peers.
WMG's Return On Invested Capital of 11.70% is amongst the best of the industry. WMG outperforms 88.75% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for WMG 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 71.25% of its industry peers.
In the last couple of years the Profit Margin of WMG has grown nicely.
WMG's Operating Margin of 13.67% is amongst the best of the industry. WMG outperforms 82.50% of its industry peers.
WMG's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 46.64%, WMG is in line with its industry, outperforming 56.25% of the companies in the same industry.
In the last couple of years the Gross Margin of WMG has remained more or less at the same level.
| 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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so WMG is still creating some value.
Compared to 1 year ago, WMG has more shares outstanding
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 1.75. This is a bad value and indicates that WMG is not financially healthy and even has some risk of bankruptcy.
WMG's Altman-Z score of 1.75 is in line compared to the rest of the industry. WMG outperforms 58.75% of its industry peers.
The Debt to FCF ratio of WMG is 11.16, which is on the high side as it means it would take WMG, 11.16 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of WMG (11.16) is comparable to the rest of the industry.
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 78.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.41 | ||
| Debt/FCF | 11.16 | ||
| Altman-Z | 1.75 |
ROIC/WACC1.5
WACC7.82%
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.
With a Current ratio value of 0.66, WMG is not doing good in the industry: 68.75% of the companies in the same industry are doing better.
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 has a worse Quick ratio (0.64) than 68.75% 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.
Measured over the past years, WMG shows a small growth in Revenue. The Revenue has been growing by 7.51% on average per year.
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
Based on estimates for the next years, WMG will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.84% on average per year.
WMG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.68% yearly.
EPS Next Y-24.72%
EPS Next 2Y11.56%
EPS Next 3Y14.15%
EPS Next 5Y11.84%
Revenue Next Year1.98%
Revenue Next 2Y3.79%
Revenue Next 3Y4.44%
Revenue Next 5Y4.68%
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
The Price/Earnings ratio is 59.75, which means the current valuation is very expensive for WMG.
Compared to the rest of the industry, the Price/Earnings ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 72.50% of the companies listed in the same industry.
WMG is valuated expensively when we compare the Price/Earnings ratio to 27.76, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 24.43, WMG is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 78.75% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.18, WMG is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 59.75 | ||
| Fwd PE | 24.43 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WMG is valued a bit cheaper than 67.50% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, WMG is valued a bit cheaper than the industry average as 67.50% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 45.41 | ||
| EV/EBITDA | 17.31 |
4.3 Compensation for Growth
The decent profitability rating of WMG may justify a higher PE ratio.
WMG's earnings are expected to grow with 14.15% in the coming years. This may justify a more expensive valuation.
PEG (NY)N/A
PEG (5Y)5.62
EPS Next 2Y11.56%
EPS Next 3Y14.15%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.32%.
WMG's Dividend Yield is rather good when compared to the industry average which is at 21.21. WMG pays more dividend than 92.50% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.41, WMG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
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
128.67% 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.
DP128.67%
EPS Next 2Y11.56%
EPS Next 3Y14.15%
34.06
+0.27 (+0.8%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners103.68%
Inst Owner Change-4.63%
Ins Owners1.3%
Ins Owner Change2%
Market Cap17.75B
Analysts78.33
Price Target37.05 (8.78%)
Short Float %5.3%
Short Ratio3.74
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
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)0.25%
PT rev (3m)10.25%
EPS NQ rev (1m)0.14%
EPS NQ rev (3m)6.57%
EPS NY rev (1m)-1.52%
EPS NY rev (3m)-26.52%
Revenue NQ rev (1m)-0.06%
Revenue NQ rev (3m)0.83%
Revenue NY rev (1m)0.12%
Revenue NY rev (3m)1.76%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 59.75 | ||
| Fwd PE | 24.43 | ||
| P/S | 2.74 | ||
| P/FCF | 45.41 | ||
| P/OCF | 23.64 | ||
| P/B | 30.14 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.31 |
EPS(TTM)0.57
EY1.67%
EPS(NY)1.39
Fwd EY4.09%
FCF(TTM)0.75
FCFY2.2%
OCF(TTM)1.44
OCFY4.23%
SpS12.41
BVpS1.13
TBVpS-8.43
PEG (NY)N/A
PEG (5Y)5.62
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
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 | 7.41 | ||
| 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 | 1.75 |
F-Score4
WACC7.82%
ROIC/WACC1.5
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-24.72%
EPS Next 2Y11.56%
EPS Next 3Y14.15%
EPS Next 5Y11.84%
Revenue 1Y (TTM)1.36%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%8.69%
Revenue Next Year1.98%
Revenue Next 2Y3.79%
Revenue Next 3Y4.44%
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%