Critical contrast: Warner Music Group (WMG) and its competitors



Warner Music Group (NASDAQ:WMG – Get Rating) is one of 33 publicly traded companies in the “entertainment and leisure services” sector, but how does it stack up against its peers? We will compare Warner Music Group to related companies based on valuation strength, profitability, dividends, institutional ownership, analyst recommendations, risk and earnings.

Analyst Notes

This is a summary of current ratings and target prices for Warner Music Group and its peers, as provided by MarketBeat.

Sales Ratings Hold odds Buy reviews Strong buy odds Rating
Warner Music Group 2 1 9 0 2.58
Warner Music Group Competitors 73 273 384 ten 2.45

Warner Music Group currently has a consensus target price of $43.58, suggesting a potential upside of 51.96%. As a group, “amusement and recreation services” companies have an upside potential of 50.62%. Given Warner Music Group’s stronger consensus rating and higher likely upside, research analysts clearly believe that Warner Music Group is more favorable than its peers.

Benefits and evaluation

This table compares the revenue, earnings per share and valuation of Warner Music Group and its peers.

Gross revenue Net revenue Price/earnings ratio
Warner Music Group $5.30 billion $304.00 million 40.39
Warner Music Group Competitors $996.05 million -74.95 million dollars 56.59

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

Institutional and insider ownership

22.3% of Warner Music Group shares are held by institutional investors. In comparison, 33.1% of the shares of all “Amusement and Leisure Services” companies are held by institutional investors. 76.6% of Warner Music Group shares are held by insiders. By comparison, 27.3% of the shares of all “Amusement and Leisure Services” companies are held by insiders. Strong institutional ownership indicates that endowments, large fund managers, and hedge funds believe a stock will outperform the market over the long term.

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 84.5% of its earnings as a dividend, suggesting it may not have enough earnings to cover its dividend payment in the future. As a group, the “amusement and leisure services” companies pay a dividend yield of 1.9% and pay out -373.9% of their earnings as a dividend. Warner Music Group has increased its dividend for 1 consecutive years.

Profitability

This table compares the net margins, return on equity and return on assets of Warner Music Group and its peers.

Net margins Return on equity return on assets
Warner Music Group 6.45% 362.14% 5.86%
Warner Music Group Competitors -2,737.81% -1.13% -206.04%

Risk and Volatility

Warner Music Group has a beta of 1.32, suggesting its stock price is 32% more volatile than the S&P 500. Comparatively, Warner Music Group’s peers have a beta of -0.33, suggesting that their average price is 133% less volatile than the S&P 500. S&P 500.

Summary

Warner Music Group beats its peers on 11 of the 15 factors compared.

About Warner Music Group (Get an assessment)

Warner Music Group Corp. operates as a music entertainment company in the United States, United Kingdom, Germany and internationally. The Company operates through the Recorded Music and Music Publishing segments. The Recorded Music segment is involved in the discovery and development of recording artists, as well as the related marketing, promotion, distribution, sale and licensing of music created by such recording artists; markets its music catalog through compilations and reissues of previously released music and video titles, as well as previously unreleased material; and operates 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; from independent labels to retail and wholesale distributors; and various distribution centers and businesses, as well as retail outlets, physical online retailers, streaming services, and download services. The Music Publishing segment owns and acquires the rights to approximately one million musical compositions including pop hits, American standards, folk songs, and film 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 music and soundtracks from 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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