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 compare to its rivals? We will compare Warner Music Group to similar companies based on the strength of its risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitability.

Volatility & Risk

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 rivals have a beta of -0.49, indicating that their average stock price is 149% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Warner Music Group and its rivals, as provided 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 73 267 377 10 2.45

Warner Music Group presently has a consensus price target of $45.50, indicating a potential upside of 57.99%. As a group, “Amusement & recreation services” companies have a potential upside of 72.37%. Given Warner Music Group’s rivals higher probable upside, analysts plainly believe Warner Music Group has less favorable growth aspects than its rivals.

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.

Profitability

This table compares Warner Music Group and its rivals’ 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%

Earnings and Valuation

This table compares Warner Music Group and its rivals top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Warner Music Group $5.30 billion $304.00 million 40.56
Warner Music Group Competitors $914.79 million -$75.39 million 54.73

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

Institutional & Insider Ownership

22.3% of Warner Music Group shares are owned by institutional investors. Comparatively, 32.5% of shares of all “Amusement & recreation services” companies are owned by institutional investors. 76.6% of Warner Music Group shares are owned by company insiders. Comparatively, 31.6% of shares of all “Amusement & recreation services” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Warner Music Group beats its rivals 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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