WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
USA - NASDAQ:WMG - US9345502036 - Common Stock
33.44 USD
+0.14 (+0.42%)
33.07 USD
-0.37 (-1.11%)
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 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
Looking at the Return On Assets, with a value of 3.00%, WMG is in the better half of the industry, outperforming 73.75% of the companies in the same industry.
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.
With an excellent Return On Invested Capital value of 11.70%, WMG belongs to the best of the industry, outperforming 88.75% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for WMG is above the industry average of 9.23%.
| 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's Profit Margin of 4.53% is fine compared to the rest of the industry. WMG outperforms 70.00% of its industry peers.
WMG's Profit Margin has improved in the last couple of years.
WMG has a Operating Margin of 13.67%. This is amongst the best in the industry. WMG outperforms 82.50% of its industry peers.
WMG's Operating Margin has improved in the last couple of years.
WMG has a Gross Margin (46.64%) which is in line with its industry peers.
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.
WMG has more shares outstanding than it did 1 year ago.
WMG has more shares outstanding than it did 5 years ago.
The debt/assets ratio for WMG has been reduced compared to a year ago.
2.2 Solvency
WMG has an Altman-Z score of 1.73. 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 1.73 is in line compared to the rest of the industry. WMG outperforms 57.50% of its industry peers.
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 comparable to the rest of the industry.
A Debt/Equity ratio of 7.41 is on the high side and indicates that WMG has dependencies on debt financing.
WMG has a worse Debt to Equity ratio (7.41) than 80.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.41 | ||
| Debt/FCF | 11.16 | ||
| Altman-Z | 1.73 |
ROIC/WACC1.52
WACC7.68%
2.3 Liquidity
A Current Ratio of 0.66 indicates that WMG may have some problems paying its short term obligations.
With a Current ratio value of 0.66, WMG is not doing good in the industry: 71.25% of the companies in the same industry are doing better.
A Quick Ratio of 0.64 indicates that WMG may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.64, WMG is doing worse than 71.25% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.66 | ||
| Quick Ratio | 0.64 |
3. Growth
3.1 Past
The earnings per share for WMG have decreased strongly by -58.70% in the last year.
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.
WMG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.51% yearly.
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
The Earnings Per Share is expected to grow by 11.84% on average over the next years. This is quite good.
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-24.72%
EPS Next 2Y11.56%
EPS Next 3Y14.15%
EPS Next 5Y11.84%
Revenue Next Year1.98%
Revenue Next 2Y3.81%
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.
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 58.67 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.
Compared to an average S&P500 Price/Earnings ratio of 27.77, WMG is valued quite expensively.
The Price/Forward Earnings ratio is 23.99, which indicates a rather expensive current valuation of WMG.
77.50% of the companies in the same industry are more expensive than WMG, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 23.23. WMG is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.67 | ||
| Fwd PE | 23.99 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WMG is valued a bit cheaper than the industry average as 65.00% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, WMG is valued a bit cheaper than 65.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 44.58 | ||
| EV/EBITDA | 17.11 |
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 14.15% in the coming years.
PEG (NY)N/A
PEG (5Y)5.51
EPS Next 2Y11.56%
EPS Next 3Y14.15%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.34%. Purely for dividend investing, there may be better candidates out there.
WMG's Dividend Yield is rather good when compared to the industry average which is at 38.93. WMG pays more dividend than 91.25% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, WMG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
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
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 2Y11.56%
EPS Next 3Y14.15%
33.44
+0.14 (+0.42%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners103.68%
Inst Owner Change0.29%
Ins Owners1.3%
Ins Owner Change2.82%
Market Cap17.43B
Analysts78.4
Price Target37.05 (10.8%)
Short Float %5.3%
Short Ratio3.74
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
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)-1.52%
EPS NY rev (3m)-25.61%
Revenue NQ rev (1m)0.06%
Revenue NQ rev (3m)1.13%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.84%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.67 | ||
| Fwd PE | 23.99 | ||
| P/S | 2.69 | ||
| P/FCF | 44.58 | ||
| P/OCF | 23.21 | ||
| P/B | 29.59 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.11 |
EPS(TTM)0.57
EY1.7%
EPS(NY)1.39
Fwd EY4.17%
FCF(TTM)0.75
FCFY2.24%
OCF(TTM)1.44
OCFY4.31%
SpS12.41
BVpS1.13
TBVpS-8.43
PEG (NY)N/A
PEG (5Y)5.51
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 | 1.73 |
F-Score4
WACC7.68%
ROIC/WACC1.52
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 2Y3.81%
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%