30.32 USD
+0.47 (+1.57%)
30.32 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.
- WMG had positive earnings in each of the past 5 years.
- In the past 5 years WMG always reported a positive cash flow from operatings.
1.2 Ratios
- WMG has a Return On Assets of 3.64%. This is in the better half of the industry: WMG outperforms 78.75% of its industry peers.
- The Return On Equity of WMG (55.33%) is better than 97.50% of its industry peers.
- WMG has a better Return On Invested Capital (12.78%) than 91.25% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for WMG is above the industry average of 8.74%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.64% | ||
| ROE | 55.33% | ||
| ROIC | 12.78% |
ROA(3y)4.44%
ROA(5y)4.89%
ROE(3y)92.24%
ROE(5y)320.47%
ROIC(3y)13.09%
ROIC(5y)12.66%
1.3 Margins
- Looking at the Profit Margin, with a value of 5.34%, WMG is in the better half of the industry, outperforming 73.75% of the companies in the same industry.
- In the last couple of years the Profit Margin of WMG has declined.
- The Operating Margin of WMG (13.84%) is better than 81.25% of its industry peers.
- WMG's Operating Margin has improved in the last couple of years.
- WMG has a Gross Margin (45.85%) which is in line with its industry peers.
- WMG's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.84% | ||
| PM (TTM) | 5.34% | ||
| GM | 45.85% |
OM growth 3Y4.68%
OM growth 5YN/A
PM growth 3Y-16.34%
PM growth 5YN/A
GM growth 3Y-1.49%
GM growth 5Y-0.8%
2. Health
2.1 Basic Checks
- WMG has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
- Compared to 1 year ago, WMG has more shares outstanding
- WMG has more shares outstanding than it did 5 years ago.
- The debt/assets ratio for WMG is higher compared to a year ago.
2.2 Solvency
- WMG has an Altman-Z score of 1.65. This is a bad value and indicates that WMG is not financially healthy and even has some risk of bankruptcy.
- WMG has a Altman-Z score (1.65) which is comparable to the rest of the industry.
- WMG has a debt to FCF ratio of 12.80. This is a negative value and a sign of low solvency as WMG would need 12.80 years to pay back of all of its debts.
- The Debt to FCF ratio of WMG (12.80) is better than 61.25% of its industry peers.
- A Debt/Equity ratio of 6.75 is on the high side and indicates that WMG has dependencies on debt financing.
- Looking at the Debt to Equity ratio, with a value of 6.75, WMG is doing worse than 78.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.75 | ||
| Debt/FCF | 12.8 | ||
| Altman-Z | 1.65 |
ROIC/WACC1.27
WACC10.03%
2.3 Liquidity
- A Current Ratio of 0.66 indicates that WMG may have some problems paying its short term obligations.
- Looking at the Current ratio, with a value of 0.66, WMG is doing worse than 71.25% of the companies in the same industry.
- 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.
- Looking at the Quick ratio, with a value of 0.64, WMG is doing worse than 70.00% of the companies in the same industry.
| 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 -37.50%.
- WMG shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -12.92% yearly.
- Looking at the last year, WMG shows a small growth in Revenue. The Revenue has grown by 4.37% in the last year.
- The Revenue has been growing by 8.49% on average over the past years. This is quite good.
EPS 1Y (TTM)-37.5%
EPS 3Y-12.92%
EPS 5YN/A
EPS Q2Q%162.5%
Revenue 1Y (TTM)4.37%
Revenue growth 3Y4.25%
Revenue growth 5Y8.49%
Sales Q2Q%14.6%
3.2 Future
- The Earnings Per Share is expected to grow by 25.18% on average over the next years. This is a very strong growth
- WMG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.95% yearly.
EPS Next Y100.37%
EPS Next 2Y56.74%
EPS Next 3Y39.53%
EPS Next 5Y25.18%
Revenue Next Year7.15%
Revenue Next 2Y6.47%
Revenue Next 3Y6.13%
Revenue Next 5Y5.95%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better 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
- WMG is valuated quite expensively with a Price/Earnings ratio of 43.31.
- 75.00% of the companies in the same industry are more expensive than WMG, based on the Price/Earnings ratio.
- Compared to an average S&P500 Price/Earnings ratio of 27.30, WMG is valued quite expensively.
- Based on the Price/Forward Earnings ratio of 21.62, the valuation of WMG can be described as rather expensive.
- 81.25% of the companies in the same industry are more expensive than WMG, based on the Price/Forward Earnings ratio.
- WMG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.32, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.31 | ||
| Fwd PE | 21.62 |
4.2 Price Multiples
- WMG's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. WMG is 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 66.25% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 46.45 | ||
| EV/EBITDA | 14.9 |
4.3 Compensation for Growth
- The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- WMG has a very decent profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as WMG's earnings are expected to grow with 39.53% in the coming years.
PEG (NY)0.43
PEG (5Y)N/A
EPS Next 2Y56.74%
EPS Next 3Y39.53%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 2.41%, WMG has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 7.66, WMG pays a better dividend. On top of this WMG pays more dividend than 92.50% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, WMG pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.41% |
5.2 History
- The dividend of WMG has a limited annual growth rate of 1.77%.
- 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)1.77%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
- WMG pays out 106.98% of its income as dividend. This is not a sustainable payout ratio.
- The dividend of WMG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP106.98%
EPS Next 2Y56.74%
EPS Next 3Y39.53%
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.
What is the valuation status of WARNER MUSIC GROUP CORP-CL A (WMG) stock?
ChartMill assigns a valuation rating of 6 / 10 to WARNER MUSIC GROUP CORP-CL A (WMG). This can be considered as Fairly Valued.
What is the profitability of WMG stock?
WARNER MUSIC GROUP CORP-CL A (WMG) has a profitability rating of 7 / 10.
What is the earnings growth outlook for WARNER MUSIC GROUP CORP-CL A?
The Earnings per Share (EPS) of WARNER MUSIC GROUP CORP-CL A (WMG) is expected to grow by 100.37% in the next year.
How sustainable is the dividend of WARNER MUSIC GROUP CORP-CL A (WMG) stock?
The dividend rating of WARNER MUSIC GROUP CORP-CL A (WMG) is 5 / 10 and the dividend payout ratio is 106.98%.