WARNER MUSIC GROUP CORP-CL A (WMG) Stock Fundamental Analysis
NASDAQ:WMG - US9345502036 - Common Stock
33.48 USD
+0.11 (+0.34%)
33.48 USD
0 (0%)
We assign a fundamental rating of 4 out of 10 to WMG. WMG was compared to 79 industry peers in the Entertainment industry. While WMG has a great profitability rating, there are quite some 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.
In the past year WMG had a positive cash flow from operations.
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 has a better Return On Assets (3.00%) than 75.95% of its industry peers.
With an excellent Return On Equity value of 49.75%, WMG belongs to the best of the industry, outperforming 97.47% of the companies in the same industry.
WMG has a better Return On Invested Capital (11.70%) than 87.34% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for WMG is significantly below the industry average of 20.67%.
| 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 better Profit Margin (4.53%) than 72.15% of its industry peers.
WMG's Profit Margin has improved in the last couple of years.
WMG has a better Operating Margin (13.67%) than 83.54% of its industry peers.
In the last couple of years the Operating Margin of WMG has grown nicely.
Looking at the Gross Margin, with a value of 46.64%, WMG is in line with its industry, outperforming 55.70% 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
WMG has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it 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 1.74. 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 1.74 is fine compared to the rest of the industry. WMG outperforms 62.03% 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 of 11.16. This is comparable to the rest of the industry: WMG outperforms 56.96% of its industry peers.
A Debt/Equity ratio of 7.41 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 7.41, WMG is doing worse than 79.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.41 | ||
| Debt/FCF | 11.16 | ||
| Altman-Z | 1.74 |
ROIC/WACC1.52
WACC7.72%
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 70.89% 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.
Looking at the Quick ratio, with a value of 0.64, WMG is doing worse than 70.89% 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.
Measured over the past years, WMG shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.64% on average per year.
WMG shows a small growth in Revenue. In the last year, the Revenue has grown by 1.36%.
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-23.56%
EPS Next 2Y12.14%
EPS Next 3Y14.22%
EPS Next 5Y11.84%
Revenue Next Year1.86%
Revenue Next 2Y3.62%
Revenue Next 3Y4.32%
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
WMG is valuated quite expensively with a Price/Earnings ratio of 58.74.
70.89% of the companies in the same industry are more expensive than WMG, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.07. WMG is valued rather expensively when compared to this.
The Price/Forward Earnings ratio is 23.77, which indicates a rather expensive current valuation of WMG.
Compared to the rest of the industry, the Price/Forward Earnings ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 78.48% of the companies listed in the same industry.
WMG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.59, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.74 | ||
| Fwd PE | 23.77 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, WMG is valued a bit cheaper than the industry average as 67.09% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of WMG indicates a somewhat cheap valuation: WMG is cheaper than 64.56% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 44.63 | ||
| EV/EBITDA | 17.13 |
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 14.22% in the coming years.
PEG (NY)N/A
PEG (5Y)5.52
EPS Next 2Y12.14%
EPS Next 3Y14.22%
5. Dividend
5.1 Amount
WMG has a Yearly Dividend Yield of 2.32%.
Compared to an average industry Dividend Yield of 10.54, WMG pays a better dividend. On top of this WMG pays more dividend than 92.41% of the companies listed in the same industry.
WMG's Dividend Yield is comparable with the S&P500 average which is at 2.46.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
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.
WMG's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP128.67%
EPS Next 2Y12.14%
EPS Next 3Y14.22%
33.48
+0.11 (+0.34%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners106.33%
Inst Owner Change-4.63%
Ins Owners1.3%
Ins Owner Change2%
Market Cap17.45B
Analysts78.33
Price Target36.96 (10.39%)
Short Float %4.17%
Short Ratio2.87
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)7.41%
PT rev (3m)10.34%
EPS NQ rev (1m)9.03%
EPS NQ rev (3m)-0.61%
EPS NY rev (1m)-24.46%
EPS NY rev (3m)-31.33%
Revenue NQ rev (1m)1.13%
Revenue NQ rev (3m)-1.16%
Revenue NY rev (1m)1.68%
Revenue NY rev (3m)1.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.74 | ||
| Fwd PE | 23.77 | ||
| P/S | 2.7 | ||
| P/FCF | 44.63 | ||
| P/OCF | 23.24 | ||
| P/B | 29.63 | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.13 |
EPS(TTM)0.57
EY1.7%
EPS(NY)1.41
Fwd EY4.21%
FCF(TTM)0.75
FCFY2.24%
OCF(TTM)1.44
OCFY4.3%
SpS12.41
BVpS1.13
TBVpS-8.43
PEG (NY)N/A
PEG (5Y)5.52
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 | 1.74 |
F-Score4
WACC7.72%
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-23.56%
EPS Next 2Y12.14%
EPS Next 3Y14.22%
EPS Next 5Y11.84%
Revenue 1Y (TTM)1.36%
Revenue growth 3Y6.63%
Revenue growth 5Y7.51%
Sales Q2Q%8.69%
Revenue Next Year1.86%
Revenue Next 2Y3.62%
Revenue Next 3Y4.32%
Revenue Next 5Y4.68%
EBIT growth 1Y-7.43%
EBIT growth 3Y16.7%
EBIT growth 5Y22.15%
EBIT Next Year36.05%
EBIT Next 3Y18.71%
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%