Warner Music Group (WMG) and The Competition Critical Analysis

Warner Music Group (NASDAQ:WMG) is one of 184 publicly-traded companies in the “Entertainment” industry, but how does it contrast to its rivals? We will compare Warner Music Group to related businesses based on the strength of its risk, dividends, earnings, valuation, institutional ownership, analyst recommendations and profitability.

Valuation and Earnings

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	$6.71 billion	$365.00 million	25.23
Warner Music Group Competitors	$4.13 billion	$73.91 million	-0.78

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Warner Music Group and its rivals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Warner Music Group	0	4	11	1	2.81
Warner Music Group Competitors	1878	4513	9630	255	2.51

Warner Music Group currently has a consensus target price of $38.30, indicating a potential upside of 20.48%. As a group, “Entertainment” companies have a potential upside of 16.95%. Given Warner Music Group’s stronger consensus rating and higher probable upside, research analysts clearly believe Warner Music Group is more favorable than its rivals.

Dividends

Warner Music Group pays an annual dividend of $0.80 per share and has a dividend yield of 2.5%. Warner Music Group pays out 63.5% of its earnings in the form of a dividend. As a group, “Entertainment” companies pay a dividend yield of 16.1% and pay out 78.5% of their earnings in the form of a dividend. Warner Music Group has raised its dividend for 4 consecutive years.

Risk and Volatility

Warner Music Group has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500. Comparatively, Warner Music Group’s rivals have a beta of 1.00, suggesting that their average share price is 0% less volatile than the S&P 500.

Insider and Institutional Ownership

96.9% of Warner Music Group shares are owned by institutional investors. Comparatively, 36.0% of shares of all “Entertainment” companies are owned by institutional investors. 0.1% of Warner Music Group shares are owned by company insiders. Comparatively, 23.6% of shares of all “Entertainment” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

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	9.20%	85.50%	7.00%
Warner Music Group Competitors	11.06%	-25.84%	-2.42%

Summary

Warner Music Group beats its rivals on 12 of the 15 factors compared.

Warner Music Group Company Profile

Warner Music Group Corp. operates as a music entertainment company in the United States, the United Kingdom, Germany, and internationally. It 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 150,000 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.