Analyzing Warner Music Group (WMG) and Its Peers

Warner Music Group (NASDAQ:WMGGet Rating) is one of 34 publicly-traded companies in the “Amusement & recreation services” industry, but how does it weigh in compared to its competitors? We will compare Warner Music Group to similar companies based on the strength of its profitability, analyst recommendations, earnings, valuation, institutional ownership, dividends and risk.

Risk & Volatility

Warner Music Group has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500. Comparatively, Warner Music Group’s competitors have a beta of -0.49, indicating that their average stock price is 149% less volatile than the S&P 500.

Dividends

Warner Music Group pays an annual dividend of $0.60 per share and has a dividend yield of 2.1%. Warner Music Group pays out 84.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Amusement & recreation services” companies pay a dividend yield of 1.9% and pay out -573.3% of their earnings in the form of a dividend. Warner Music Group has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for Warner Music Group and its competitors, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Warner Music Group 2 2 8 0 2.50
Warner Music Group Competitors 73 267 376 10 2.44

Warner Music Group presently has a consensus target price of $45.50, suggesting a potential upside of 56.46%. As a group, “Amusement & recreation services” companies have a potential upside of 69.14%. Given Warner Music Group’s competitors higher probable upside, analysts plainly believe Warner Music Group has less favorable growth aspects than its competitors.

Earnings and Valuation

This table compares Warner Music Group and its competitors revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Warner Music Group $5.30 billion $304.00 million 40.96
Warner Music Group Competitors $914.79 million -$75.39 million 53.56

Warner Music Group has higher revenue and earnings than its competitors. Warner Music Group is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Warner Music Group and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Warner Music Group 6.45% 421.73% 5.93%
Warner Music Group Competitors 2,290.89% 1.22% 170.83%

Institutional and Insider Ownership

22.3% of Warner Music Group shares are held by institutional investors. Comparatively, 34.0% of shares of all “Amusement & recreation services” companies are held by institutional investors. 76.6% of Warner Music Group shares are held by company insiders. Comparatively, 29.4% of shares of all “Amusement & recreation services” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Warner Music Group beats its competitors on 8 of the 15 factors compared.

About Warner Music Group (Get Rating)

Warner Music Group Corp. operates as a music entertainment company in the United States, the United Kingdom, Germany, and internationally. The company operates through Recorded Music and Music Publishing segments. The Recorded Music segment is involved in the discovery and development of recording artists, as well as related marketing, promotion, distribution, sale, and licensing of music created by such recording artists; markets its music catalog through compilations and reissuances of previously released music and video titles, as well as previously unreleased materials; and conducts its operation primarily through a collection of record labels, such as Warner Records and Atlantic Records, as well as Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, Sire, Spinnin' Records, Warner Classics, and Warner Music Nashville. This segment markets, distributes, and sells music and video products to retailers and wholesale distributors; independent labels to retail and wholesale distributors; and various distribution centers and ventures, as well as retail outlets, online physical retailers, streaming services, and download services. The Music Publishing segment owns and acquires rights to approximately one million musical compositions comprising pop hits, American standards, folk songs, and motion picture and theatrical compositions. Its catalog includes approximately 100,000 songwriters and composers; and various genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative, and gospel. This segment also administers the music and soundtracks of various third-party television and film producers and studios. The company was founded in 1929 and is headquartered in New York, New York.

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