Warner Music Group (WMG) AI Stock Analysis

• Market Cap: $15.54B
• Dividend Yield: 2.45%
• Average Volume (3M): 1.81M
• Price to Earnings (P/E): 52.8
• Beta (1Y): 0.73
• Revenue Growth: 1.36%
• EPS Growth: -45.79%
• Country: US
• Employees: 5,800
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): -0.03
• Shares Outstanding: 145,886,570
• 10 Day Avg. Volume: 1,856,206
• 30 Day Avg. Volume: 1,812,052
• PEG Ratio: -15.64
• Price to Book (P/B): 31.27
• Price to Sales (P/S): 2.52
• P/FCF Ratio: 25.39
• Enterprise Value/Market Cap: 1.19
• Enterprise Value/Revenue: 2.86
• Enterprise Value/Gross Profit: 6.14
• Enterprise Value/Ebitda: 19.51
• 1Y Price Target: $37.33
• Price Target Upside: 25.48% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 63 Neutral
• Price Target: $34.00 ▲(14.29% Upside)

Warner Music Group's overall score reflects solid revenue growth and strategic initiatives to enhance market share and efficiency. However, high leverage, cash flow issues, and a high P/E ratio present significant risks. Technical indicators suggest potential bearish momentum, adding to the cautious outlook.

Positive Factors

Revenue Growth

Warner Music Group's strong revenue growth reflects its ability to capitalize on streaming trends and expand its market presence, supporting long-term business stability.

Strategic Joint Venture

The joint venture with Bain Capital strengthens Warner Music's strategic position by boosting its catalog acquisition capabilities, potentially increasing future revenue streams.

Cost Savings Initiative

The cost savings initiative will enhance operational efficiency and margin expansion, improving Warner Music's financial health over the long term.

Negative Factors

High Leverage

Warner Music's high leverage could limit financial flexibility and increase risk, potentially impacting its ability to invest in growth opportunities.

Declining Cash Flow

The decline in operating cash flow suggests potential cash management issues, which could affect Warner Music's ability to fund operations and strategic initiatives.

Decreased Net Profit Margin

The decrease in net profit margin indicates rising costs or financial pressures, which could challenge Warner Music's profitability and long-term financial performance.

Warner Music Group Business Overview & Revenue Model

Company Description

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.

How the Company Makes Money

WMG generates revenue through multiple streams. The primary sources of income include recorded music sales, which encompass physical sales (CDs, vinyl) and digital downloads, as well as streaming services. Music publishing is another significant revenue stream, where WMG earns money by licensing songs for use in films, television, advertisements, and more. Additionally, WMG benefits from live performances and merchandising through partnerships with artists and event organizers. The company has established partnerships with major streaming platforms like Spotify and Apple Music, which provide a substantial source of revenue through streaming royalties. Moreover, WMG's investment in emerging technologies and platforms enhances its ability to monetize music in the digital landscape, contributing to its overall earnings.

Warner Music Group Financial Statement Overview

Summary

Warner Music Group demonstrates solid revenue growth and profitability, but faces challenges with declining margins and high leverage. The balance sheet reflects significant debt, which could impact future financial flexibility. Cash flow management shows some weaknesses, particularly in free cash flow generation. Overall, the company maintains a stable financial position but should address leverage and cash flow issues to enhance financial health.

Income Statement

Warner Music Group shows a stable revenue growth with a TTM (Trailing-Twelve-Months) increase of 2.13%. The gross profit margin remains strong at 46.64%, indicating efficient cost management. However, the net profit margin has decreased to 4.59% from 6.77% in the previous year, suggesting increased expenses or other financial pressures. The EBIT and EBITDA margins have also declined, reflecting potential challenges in operational efficiency.

Balance Sheet

The company has a high debt-to-equity ratio of 7.84, indicating significant leverage which could pose financial risk. Return on equity is relatively strong at 53.54%, showing effective use of equity to generate profits. However, the equity ratio is low, suggesting limited equity financing compared to total assets, which could impact financial stability.

Cash Flow

Operating cash flow remains healthy, but free cash flow has decreased by 29.98% in the TTM, indicating potential cash management issues. The operating cash flow to net income ratio is 0.19, and the free cash flow to net income ratio is 0.58, both suggesting moderate efficiency in converting income to cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.47B	6.43B	6.04B	5.92B	5.30B	4.46B
Gross Profit	3.02B	3.07B	2.86B	2.84B	2.56B	2.13B
EBITDA	949.00M	1.09B	1.08B	1.20B	884.00M	-59.00M
Net Income	297.00M	435.00M	430.00M	551.00M	304.00M	-475.00M
Balance Sheet
Total Assets	9.78B	9.15B	8.54B	7.83B	7.21B	6.41B
Cash, Cash Equivalents and Short-Term Investments	527.00M	694.00M	641.00M	584.00M	499.00M	553.00M
Total Debt	4.62B	4.29B	4.26B	4.01B	3.68B	3.44B
Total Liabilities	8.96B	8.48B	8.12B	7.66B	7.17B	6.46B
Stockholders Equity	589.00M	518.00M	307.00M	152.00M	31.00M	-63.00M
Cash Flow
Free Cash Flow	432.00M	638.00M	446.00M	416.00M	64.00M	338.00M
Operating Cash Flow	751.00M	754.00M	687.00M	742.00M	638.00M	463.00M
Investing Cash Flow	-383.00M	-311.00M	-300.00M	-824.00M	-638.00M	-219.00M
Financing Cash Flow	-460.00M	-396.00M	-325.00M	188.00M	-61.00M	-316.00M

Warner Music Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 29.75
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WMG, the sentiment is Negative. The current price of 29.75 is below the 20-day moving average (MA) of 32.05, below the 50-day MA of 32.87, and below the 200-day MA of 30.77, indicating a bearish trend. The MACD of -0.73 indicates Positive momentum. The RSI at 26.75 is Positive, neither overbought nor oversold. The STOCH value of 8.34 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WMG.

Warner Music Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WMG	63 Neutral	$15.54B	52.76	54.66%	2.45%	1.36%	-45.79%
RSVR	61 Neutral	$485.79M	65.00	2.64%	―	11.17%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
SIRI	54 Neutral	$7.35B	7.87	8.86%	4.99%	-2.80%	―
DLPN	50 Neutral	$20.19M	-0.75	-101.62%	―	4.84%	-9.71%
ANGH	41 Neutral	$18.96M	-0.25	―	―	88.72%	-85.54%
KUKE	39 Underperform	$3.33M	―	―	―	-36.94%	15.41%

Warner Music Group Corporate Events

Warner Music Group’s Earnings Call Highlights Growth and Strategic Moves

Warner Music Group’s latest earnings call painted a picture of robust performance, marked by significant revenue growth and strategic advancements. The sentiment was largely positive, with the company celebrating market share gains and successful artist releases. However, challenges were noted in areas such as cash flow and ad-supported streaming revenue, as well as market share issues in certain regions.

Warner Music Group Reports Strong Revenue Growth

Warner Music Group Corp. is a leading global music entertainment company, known for its diverse roster of artists and songwriters, operating primarily in the recorded music and music publishing sectors. The company boasts iconic labels and a rich catalog spanning various musical genres.

Warner Music Group Reports 9% Revenue Increase

Warner Music Group reported a 9% increase in total revenue for the fiscal third quarter ended June 30, 2025, driven by gains in recorded music and music publishing. Despite a net loss of $16 million, the company saw an 18% increase in Adjusted OIBDA, reflecting its strategic focus on market share gains and efficiency. The announcement highlights Warner’s commitment to investing in music and expanding its global impact, although challenges such as increased restructuring costs and a decrease in operating income were noted.

The most recent analyst rating on (WMG) stock is a Sell with a $28.00 price target. To see the full list of analyst forecasts on Warner Music Group stock, see the WMG Stock Forecast page.