Warner Music Group (WMG) AI Stock Analysis

• Market Cap: $16.41B
• Dividend Yield: 2.31%
• Average Volume (3M): 1.61M
• Price to Earnings (P/E): 36.6
• Beta (1Y): 0.69
• Revenue Growth: -0.91%
• EPS Growth: -14.87%
• Country: US
• Employees: 5,800
• Sector: Communication Services
• Sector Strength: 76
• Industry: Entertainment
• EPS (TTM): 0.12
• Shares Outstanding: 145,886,570
• 10 Day Avg. Volume: 1,630,998
• 30 Day Avg. Volume: 1,609,572
• PEG Ratio: -12.81
• Price to Book (P/B): 29.18
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 28.88
• Enterprise Value/Market Cap: 1.24
• Enterprise Value/Revenue: 1.67
• Enterprise Value/Gross Profit: 13.97
• Enterprise Value/Ebitda: 10.65
• 1Y Price Target: $32.43
• Price Target Upside: 4.11% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 68 Neutral
• Price Target: $32.00 ▲(2.73%Upside)

Warner Music Group's strong financial performance and strategic initiatives are offset by high leverage and valuation concerns. Technical indicators suggest caution due to potential overbought conditions. The earnings call reflects both opportunities and challenges, impacting short-term outlook.

Positive Factors

Commercial Agreements

Recent commercial agreements with DSPs will provide greater visibility and predictability in the subscription streaming business.

Global Streaming Growth

WMG is well-positioned to benefit from the ongoing growth in paid music streaming globally, with potential upside from subscription price increases and emerging platforms.

Joint Venture

A joint venture with Bain allows for the purchase of up to $1.2 billion of music catalogs, providing additional firepower for investments into A&R.

Negative Factors

Recorded Music Performance

Warner Music Group reported disappointing F2Q25 results which were below revenue and adj. OIBDA expectations.

Streaming Growth Outlook

Downgrade to Neutral on weaker outlook for subscription streaming.

Subscription Streaming

Weaker Subscription and Ad-supported Streaming growth.

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 primarily through its Recorded Music and Music Publishing segments. In the Recorded Music segment, the company earns money from the sale and streaming of recorded music, licensing of recordings, and merchandising. This includes revenue from digital platforms like Spotify and Apple Music, physical sales, and performance rights. The Music Publishing segment makes money by licensing compositions for use in media, covers, and public performances, as well as collecting royalties from various sources. WMG also benefits from strategic partnerships with digital service providers and collaborations with other entertainment entities, which enhance its distribution capabilities and expand its revenue streams.

Warner Music Group Financial Statement Overview

Summary

Warner Music Group shows strong revenue growth and profitability, with notable cash flow generation. However, high leverage and low equity ratio present financial risks that need careful management.

Income Statement

The income statement shows a positive trajectory for Warner Music Group with consistent revenue growth over the years, though there was a slight dip in the most recent TTM period. Gross Profit Margin remains robust at 46.8% in the TTM, indicating efficient production and cost management. Net Profit Margin is healthy at 7.1%, though slightly down from previous periods. EBIT and EBITDA margins are solid, indicating strong operational performance despite a competitive industry landscape.

Balance Sheet

The balance sheet indicates a relatively high Debt-to-Equity Ratio of 8.03, reflecting heavy leverage which poses a potential risk. However, the Return on Equity (ROE) is impressive at 79.7% for the TTM, suggesting that the company effectively uses shareholder funds to generate profits. The Equity Ratio is low at 5.9%, indicating a high reliance on debt financing which could impact financial stability in the long term.

Cash Flow

Cash flow analysis shows a positive Free Cash Flow Growth Rate of 28.8% in the TTM, indicating strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio is 1.97, suggesting efficient cash flow management. The Free Cash Flow to Net Income Ratio is 1.27, indicating that the company is generating more cash than net income, which is a positive sign for liquidity and financial flexibility.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.43B	6.04B	5.92B	5.30B	4.46B
Gross Profit	3.07B	2.86B	2.84B	2.56B	2.13B
EBITDA	1.09B	1.16B	1.20B	915.00M	-59.00M
Net Income	435.00M	430.00M	551.00M	304.00M	-475.00M
Balance Sheet
Total Assets	9.15B	8.54B	7.83B	7.21B	6.41B
Cash, Cash Equivalents and Short-Term Investments	694.00M	641.00M	584.00M	499.00M	553.00M
Total Debt	4.29B	4.26B	4.01B	3.68B	3.44B
Total Liabilities	8.48B	8.12B	7.66B	7.17B	6.46B
Stockholders Equity	518.00M	307.00M	152.00M	31.00M	-63.00M
Cash Flow
Free Cash Flow	638.00M	446.00M	416.00M	64.00M	338.00M
Operating Cash Flow	754.00M	687.00M	742.00M	638.00M	463.00M
Investing Cash Flow	-311.00M	-300.00M	-824.00M	-638.00M	-219.00M
Financing Cash Flow	-396.00M	-325.00M	188.00M	-61.00M	-316.00M

Warner Music Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 31.15
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WMG, the sentiment is Positive. The current price of 31.15 is above the 20-day moving average (MA) of 30.02, above the 50-day MA of 27.91, and above the 200-day MA of 30.46, indicating a bullish trend. The MACD of 1.06 indicates Negative momentum. The RSI at 68.28 is Neutral, neither overbought nor oversold. The STOCH value of 77.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WMG.

Warner Music Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RSVR	72 Outperform	$538.83M	68.26	2.16%	―	9.56%	1088.00%
WMG	68 Neutral	$16.41B	36.59	89.20%	2.31%	-0.91%	-14.87%
Sector *	62 Neutral	$42.18B	-1.56	-12.06%	2.81%	2.10%	-71.01%
LGF.A	47 Neutral	$1.93B	―	168.75%	―	-2.85%	75.96%
LGF.B	42 Neutral	$1.93B	―	259.47%	―	-2.85%	75.96%
LION	41 Neutral	$1.86B	―	19.96%	―	―	-285.78%
ANGH	40 Neutral	$31.13M	―	-270.84%	―	88.72%	-85.53%

Warner Music Group Corporate Events

Warner Music Group Forms Joint Venture with Bain

On June 29, 2025, Warner Music Group‘s subsidiary, WMG BC Holdco LLC, entered into a joint venture agreement with Bain Capital’s subsidiary to form Beethoven JV 1 LLC, focusing on acquiring and managing music catalogs. This venture, with a $500 million equity commitment and additional debt financing, aims to enhance Warner Music’s catalog acquisition capabilities. Additionally, Warner Music announced cost-reduction measures to save $300 million annually by 2026, including headcount reductions and administrative cuts, to reinvest in growth and improve operational efficiency.

The most recent analyst rating on (WMG) stock is a Hold with a $35.00 price target. To see the full list of analyst forecasts on Warner Music Group stock, see the WMG Stock Forecast page.

Warner Music Group Declares Quarterly Cash Dividend

On May 16, 2025, Warner Music Group announced a regular quarterly cash dividend of $0.18 per share for its Class A and Class B Common Stock, payable on June 3, 2025, to shareholders recorded by May 27, 2025. This decision underscores Warner Music Group’s commitment to providing consistent returns to its investors, reflecting its stable financial performance and strategic positioning within the music industry.

The most recent analyst rating on (WMG) stock is a Hold with a $32.00 price target. To see the full list of analyst forecasts on Warner Music Group stock, see the WMG Stock Forecast page.