Warner Music Group (WMG)
NASDAQ:WMG
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Warner Music Group
(NASDAQ:WMG)
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Rating:61Neutral
Price Target:
$25.00
▲(3.52% Upside)
Action:ReiteratedDate:03/12/26
WMG scores as a moderate opportunity: strong recent earnings-call momentum (material margin and cash-flow improvement with clear strategic initiatives) is offset by elevated balance-sheet leverage and a weak technical setup with the stock trading below key moving averages. Valuation and dividend are supportive but not meaningfully cheap enough to outweigh leverage and trend risks.
Positive Factors
Durable cash generation
Consistently strong operating and free cash flow provides durable internal funding for dividends, catalog M&A, tech/AI investments and working capital. High FCF growth improves ability to pay down debt and sustain investment even if top-line growth moderates over several quarters.
Negative Factors
Elevated financial leverage
Very high leverage constrains long-term financial flexibility, increases interest and refinancing risk, and limits room to absorb shocks. Even with good cash flow, elevated debt raises vulnerability to rate moves and can force prioritizing deleveraging over opportunistic investments.
Read all positive and negative factors
Positive Factors
Negative Factors
Durable cash generation
Consistently strong operating and free cash flow provides durable internal funding for dividends, catalog M&A, tech/AI investments and working capital. High FCF growth improves ability to pay down debt and sustain investment even if top-line growth moderates over several quarters.
Read all positive factors
Warner Music Group (WMG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.61B
Dividend Yield2.47%
Average Volume (3M)2.34M
Price to Earnings (P/E)22.6
Beta (1Y)0.72
Revenue Growth4.37%
EPS Growth-16.22%
CountryUS
Employees5,800
SectorCommunication Services
Sector Strength97
IndustryEntertainment
Share Statistics
EPS (TTM)0.33
Shares Outstanding146,965,850
10 Day Avg. Volume2,186,320
30 Day Avg. Volume2,335,281
Financial Highlights & Ratios
PEG Ratio-3.09
Price to Book (P/B)27.32
Price to Sales (P/S)2.64
P/FCF Ratio32.80
Enterprise Value/Market Cap1.30
Enterprise Value/Revenue2.38
Enterprise Value/Gross Profit5.36
Enterprise Value/Ebitda15.60
Forecast
1Y Price Target
$37.92Price Target Upside57.02% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
EPS Forecast (FY)1.36
Revenue Forecast (FY)$7.11B
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 inv...
How the Company Makes Money
WMG generates revenue mainly from monetizing music rights through two core segments: Recorded Music and Music Publishing.
Recorded Music revenue: WMG earns money by releasing and distributing sound recordings and deriving income from their usage....
Warner Music Group Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Warner Music Group is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Warner Music Group is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyWarner Music Group Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call presented multiple strong operating and financial beats: mid-to-high single-digit revenue growth, double-digit adjusted OIBDA growth, ~310 bps margin expansion to ~25%, robust operating cash flow growth and market share gains. Management also highlighted strategic progress: early AI partnerships, a larger Bain JV for catalog M&A, and cost-savings contributing to margin improvement. Challenges were limited but notable — an 11% physical sales decline, Asia underperformance requiring leadership changes and execution risk tied to future AI monetization and M&A deployment. Overall, the positives (clear revenue and margin acceleration, cash generation, market-share momentum and strategic initiatives) materially outweighed the negatives.Positive Updates
Revenue Growth
Total revenue increased 7% year-over-year (constant currency), driven by strength across Recorded Music and Music Publishing.
Negative Updates
Physical Sales Decline
Physical revenue declined 11% year-over-year due to difficult prior-year comparisons (notably releases from Linkin Park and strong releases in Japan and Korea).
Read all updates
Q1-2026 Updates
Positive
Negative
Revenue Growth
Total revenue increased 7% year-over-year (constant currency), driven by strength across Recorded Music and Music Publishing.
Read all positive updates
Company Guidance
Warner laid out clear financial targets and near‑term drivers: management reiterated a baseline of high single‑digit total revenue growth, double‑digit adjusted OIBDA growth and 50–60% operating cash‑flow conversion, noting Q1 results that support the plan (total revenue +7%; adjusted OIBDA +22%; margin +310 bps; operating cash flow +33%; cash up >$200M to $751M). Division trends include recorded music subscription streaming +11% (or +9% ex‑notable items), ad‑supported streaming +4%, physical −11%, Artist Services/Expanded rates +13%, and publishing +9% (or +15% ex‑notable items). Management expects cost savings to contribute 150–200 bps to margin in fiscal 2026, sees mid‑20s margins achievable in the short term with a longer‑term goal in the high‑20s, and highlighted PSM increases starting in Q2, a BMG roll‑off impact of $6M in Q1 and ≈$10M per quarter thereafter, an enlarged Bain JV funding capacity (from $1.2B to roughly $1.65–1.7B) to be largely deployed by year‑end, and AI partnerships (consumption‑based, higher ARPUs) that management expects to be a material top‑ and bottom‑line contributor beginning in fiscal 2027.Warner Music Group Financial Statement Overview
Summary
Income Statement
67
Positive
Balance Sheet
42
Neutral
Cash Flow
74
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.88B | 6.71B | 6.43B | 6.04B | 5.92B | 5.30B |
| Gross Profit | 3.06B | 3.08B | 3.07B | 2.86B | 2.84B | 2.56B |
| EBITDA | 1.05B | 1.11B | 1.09B | 1.08B | 1.20B | 884.00M |
| Net Income | 305.00M | 365.00M | 435.00M | 430.00M | 551.00M | 304.00M |
Balance Sheet | ||||||
| Total Assets | 10.01B | 9.83B | 9.15B | 8.54B | 7.83B | 7.21B |
| Cash, Cash Equivalents and Short-Term Investments | 751.00M | 532.00M | 694.00M | 641.00M | 584.00M | 499.00M |
| Total Debt | 4.79B | 4.61B | 4.29B | 4.26B | 4.01B | 3.68B |
| Total Liabilities | 9.18B | 9.07B | 8.48B | 8.12B | 7.66B | 7.17B |
| Stockholders Equity | 720.00M | 647.00M | 518.00M | 307.00M | 152.00M | 31.00M |
Cash Flow | ||||||
| Free Cash Flow | 522.00M | 539.00M | 638.00M | 446.00M | 416.00M | 64.00M |
| Operating Cash Flow | 786.00M | 678.00M | 754.00M | 687.00M | 742.00M | 638.00M |
| Investing Cash Flow | -311.00M | -340.00M | -311.00M | -300.00M | -824.00M | -638.00M |
| Financing Cash Flow | -529.00M | -497.00M | -396.00M | -325.00M | 188.00M | -61.00M |
Warner Music Group Technical Analysis
Negative
24.15
Price Trends
28.44
Negative
28.87
Negative
29.82
Negative
Market Momentum
-1.27
Positive
27.80
Positive
9.74
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 24.15 is below the 20-day moving average (MA) of 26.76, below the 50-day MA of 28.44, and below the 200-day MA of 29.82, indicating a bearish trend. The MACD of -1.27 indicates Positive momentum. The RSI at 27.80 is Positive, neither overbought nor oversold. The STOCH value of 9.74 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WMG.
Warner Music Group Risk Analysis
Warner Music Group disclosed 44 risk factors in its most recent earnings report. Warner Music Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Warner Music Group Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $7.52B | 8.40 | 7.05% | 5.28% | -2.80% | ― | |
61 Neutral | $12.61B | 22.61 | 48.36% | 2.47% | 4.37% | -16.22% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
57 Neutral | $615.99M | 56.34 | 2.64% | ― | 11.17% | ― | |
50 Neutral | $19.15M | -10.31 | -55.09% | ― | 3.86% | 81.68% | |
41 Neutral | $28.83M | -0.29 | -270.84% | ― | 88.72% | -85.54% |
* Communication Services Sector Average
WMG
Warner Music Group
24.15
-7.52
-23.74%
SIRI
Sirius XM Holdings
22.36
-0.69
-2.98%
DLPN
Dolphin Entertainment
1.54
0.52
50.98%
ANGH
Anghami Inc.
3.18
-4.02
-55.83%
RSVR
Reservoir Media
9.39
2.06
28.10%
Warner Music Group Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Warner Music Expands Credit Facilities, Enhancing Financial Flexibility
Positive
Mar 12, 2026
On March 11, 2026, WMG Acquisition Corp., a subsidiary of Warner Music Group, entered into an amended and restated credit agreement that replaces its November 1, 2012 facility and folds in the January 31, 2018 revolving credit line. The new agreem...
Executive/Board ChangesShareholder Meetings
Warner Music Shareholders Back Directors and KPMG Auditor
Positive
Mar 6, 2026
On March 3, 2026, Warner Music Group held its Annual Meeting of Stockholders, where shareholders voted on director elections and the appointment of the independent auditor. Investors re-elected all eleven director nominees, including CEO Robert Ky...
Business Operations and StrategyRegulatory Filings and Compliance
Warner Music Outlines Digital-First Investor Communications Strategy
Positive
Mar 3, 2026
Warner Music Group on March 3, 2026, circulated a shareholder letter and signaled that it will increasingly use online and social channels to communicate material information to investors, alongside its traditional SEC filings, press releases, cal...
Business Operations and StrategyDividendsFinancial Disclosures
Warner Music Group Delivers Strong Fiscal Q1 2026 Results
Positive
Feb 5, 2026
Warner Music Group Corp. reported results for its fiscal first quarter ended December 31, 2025, on February 5, 2026, posting 10% year-on-year revenue growth to $1.84 billion, driven by broad-based gains in both recorded music and music publishing ...
Business Operations and StrategyPrivate Placements and Financing
Warner Music, Bain Capital deepen joint venture commitment
Positive
Feb 5, 2026
On February 4, 2026, Warner Music Group’s wholly owned indirect subsidiary WMG BC Holdco LLC amended its Master Operations and Economics Agreement, originally signed on June 29, 2025, with Bain Capital Special Situations affiliate BCSS W JV ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.