Universal Music Group (UMG) AI Stock Analysis

• Market Cap: $40.30B
• Dividend Yield: 2.38%
• Average Volume (3M): 1.92M
• Price to Earnings (P/E): 15.4
• Beta (1Y): 0.82
• Revenue Growth: 6.12%
• EPS Growth: 67.59%
• Country: NL
• Employees: 9,636
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 0.20
• Shares Outstanding: 1,834,181,800
• 10 Day Avg. Volume: 2,134,686
• 30 Day Avg. Volume: 1,916,599
• PEG Ratio: 0.33
• Price to Book (P/B): 9.98
• Price to Sales (P/S): 3.82
• P/FCF Ratio: 34.58
• Enterprise Value/Market Cap: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: $31.07
• Price Target Upside: 42.08% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 1.02
• Revenue Forecast (FY): $12.33B

• Rating: 71 Outperform
• Price Target: €25.00 ▲(14.31% Upside)

Universal Music Group's overall stock score is driven by its strong financial performance and positive earnings call sentiment, highlighting robust revenue growth and strategic initiatives. However, the technical analysis indicates bearish momentum, which weighs down the score. The valuation is fair, supported by a reasonable P/E ratio and attractive dividend yield.

Positive Factors

Revenue Growth

Consistent revenue and EBITDA growth indicate strong market demand and effective business strategies, supporting long-term financial health.

International Expansion

Expanding international presence enhances UMG's market reach and potential revenue streams, strengthening its competitive position globally.

Innovation in AI and Streaming

Innovative AI and streaming agreements position UMG at the forefront of digital transformation, enhancing future growth and adaptability.

Negative Factors

High Leverage Ratio

High leverage can increase financial risk, potentially impacting UMG's ability to invest in growth opportunities and manage economic downturns.

Cash Flow Volatility

Volatile cash flows can challenge liquidity management, affecting UMG's capacity to sustain operations and fund strategic initiatives.

Challenges in Monetizing Short-Form Video

Difficulty in monetizing short-form video content may limit revenue growth in digital media, a critical area for future expansion.

Universal Music Group Business Overview & Revenue Model

Company Description

Universal Music Group N.V. operates as a music company worldwide. It operates through Recorded Music, Music Publishing, and Merchandising & Other segments. The Recorded Music segment discovers and develops recording artists, as well as markets and promotes their music across various formats and platforms; and engages in the live events, sponsorship, film, and television operations. The Music Publishing segment discovers and develops songwriters, as well as owns and administers the copyright for musical compositions used in recordings, public performances, and related uses, such as films and advertisements. The Merchandising & Other segment produces and sells artist and other branded products through various sales channels, including fashion retail, concert touring, and internet, as well as offers brand rights management services. The company has approximately 3 million recordings, 4 million owned and administered titles, and 250 artists/brands, as well as owns approximately 50 labels covering various music genres. The company was incorporated in 2020 and is headquartered in Hilversum, the Netherlands.

How the Company Makes Money

Universal Music Group generates revenue through several key streams. Primarily, it earns money from the sale and streaming of recorded music, which includes physical sales of CDs and vinyl, as well as digital downloads and streaming royalties from platforms like Spotify, Apple Music, and YouTube. Additionally, UMG derives significant income from music publishing, which involves licensing songs for use in films, television, advertisements, and other media, generating royalties for songwriters and rights holders. Merchandising, particularly related to its artists, adds another revenue stream through merchandise sales at concerts and online. Strategic partnerships with tech companies and platforms enhance UMG's ability to monetize its music catalog, while ongoing investments in emerging markets and technologies also contribute to its financial growth.

Universal Music Group Financial Statement Overview

Summary

Universal Music Group demonstrates strong financial performance with significant revenue growth and solid profit margins. The company effectively manages its cash flow, maintaining healthy free cash flow levels. Despite a high leverage ratio, the growth in equity indicates financial stability. Overall, the company is well-positioned within the entertainment industry, though careful management of debt levels and cash flow volatility is advisable.

Income Statement

Universal Music Group shows strong revenue growth with a consistent upward trend, increasing from €7.16 billion in 2019 to €11.83 billion in 2024. Gross profit margin and EBIT margin are solid, indicating efficient operational management. However, net profit margin has fluctuated slightly, suggesting room for improvement in cost management. Overall, the company demonstrates robust income generation capabilities.

Balance Sheet

The balance sheet reveals a stable increase in stockholders' equity, although the debt-to-equity ratio is relatively high, indicating significant leverage. The absence of total assets and liabilities data for 2024 limits detailed analysis, but previous years show a stable equity ratio, suggesting prudent asset management. Despite the higher leverage, the company's equity growth is a positive indicator.

Cash Flow

Universal Music Group's cash flow statement reflects healthy free cash flow generation, with a positive trajectory in operating cash flow. The free cash flow to net income ratio is strong, reflecting effective cash management. However, recent fluctuations in investing and financing cash flows highlight potential volatility in cash usage, posing a risk to liquidity management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	12.19B	11.83B	11.11B	10.34B	8.50B	7.43B
Gross Profit	4.78B	5.09B	4.90B	4.59B	3.90B	3.52B
EBITDA	4.14B	3.47B	1.83B	1.35B	1.49B	2.07B
Net Income	2.60B	2.09B	1.26B	782.00M	886.00M	1.37B
Balance Sheet
Total Assets	18.30B	17.86B	13.09B	11.64B	12.09B	11.54B
Cash, Cash Equivalents and Short-Term Investments	525.00M	580.00M	504.00M	439.00M	585.00M	1.14B
Total Debt	3.73B	3.19B	2.51B	2.67B	3.10B	3.53B
Total Liabilities	13.39B	13.31B	10.11B	9.29B	10.06B	9.91B
Stockholders Equity	4.88B	4.53B	2.96B	2.35B	2.03B	1.43B
Cash Flow
Free Cash Flow	1.64B	1.31B	1.59B	1.64B	1.08B	-69.00M
Operating Cash Flow	1.73B	1.75B	1.89B	1.73B	1.14B	-3.00M
Investing Cash Flow	-1.10B	-1.05B	-622.00M	-520.00M	-391.00M	-46.00M
Financing Cash Flow	-743.00M	-552.00M	-1.28B	-1.35B	-1.34B	217.00M

Universal Music Group Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 21.87
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NL:UMG, the sentiment is Neutral. The current price of 21.87 is below the 20-day moving average (MA) of 21.89, below the 50-day MA of 22.64, and below the 200-day MA of 24.74, indicating a bearish trend. The MACD of -0.28 indicates Negative momentum. The RSI at 47.27 is Neutral, neither overbought nor oversold. The STOCH value of 59.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NL:UMG.

Universal Music Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UMG	71 Outperform	$40.30B	15.44	60.27%	2.38%	6.12%	67.59%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
BNJ	56 Neutral	€4.21B	19.88	―	4.17%	7.13%	117.79%