Warner Music Group Corp. (WMG)
NASDAQ:WMG
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Warner Music Group
(NASDAQ:WMG)
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Rating:75Outperform
Price Target:
$38.00
▲(25.62% Upside)
Action:Reiterated
Date:05/09/26
The score is driven primarily by solid financial performance anchored by strong free-cash-flow generation, plus a notably positive earnings call with double-digit growth and margin expansion guidance. Offsetting factors include compressed operating margins versus prior years, overextended technical momentum signals (RSI/Stoch), and limited valuation clarity due to the provided P/E value being unusable (though the ~2.25% dividend yield is a partial positive).
Positive Factors
Cash generation
Sustained high operating and free cash flow provides durable funding for catalog purchases, AI investments, dividends and buybacks, reducing dependence on external financing. Strong conversion of earnings to cash supports reinvestment and shareholder returns, though cyclicality is a watch item.
Negative Factors
Thin equity cushion
Equity is small relative to the asset base, which magnifies sensitivity to valuation changes or impairments and amplifies returns volatility. A thin shareholder equity cushion reduces shock-absorption capacity and increases reliance on ongoing cash generation and favorable market conditions.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Sustained high operating and free cash flow provides durable funding for catalog purchases, AI investments, dividends and buybacks, reducing dependence on external financing. Strong conversion of earnings to cash supports reinvestment and shareholder returns, though cyclicality is a watch item.
Read all positive factors
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 (WMG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$18.11B
Dividend Yield2.47%
Average Volume (3M)2.53M
Price to Earnings (P/E)18.1
Beta (1Y)0.98
Revenue Growth12.55%
EPS Growth-0.50%
CountryUS
Employees5,800
SectorCommunication Services
Sector Strength97
IndustryEntertainment
Share Statistics
EPS (TTM)0.87
Shares Outstanding146,235,210
10 Day Avg. Volume3,071,091
30 Day Avg. Volume2,525,328
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 Cap1.23
Enterprise Value/Revenue3.13
Enterprise Value/Gross Profit6.84
Enterprise Value/Ebitda17.78
Forecast
1Y Price Target
$38.40Price Target Upside26.94% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
EPS Forecast (FY)1.41
Revenue Forecast (FY)$7.27B
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 primarily makes money by monetizing rights in sound recordings and musical compositions across a range of distribution and licensing channels.
1) Recorded Music revenue (sound recording rights)
- Streaming: WMG earns revenue when its catalog ...
Warner Music Group Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 11, 2026
Earnings Call Sentiment Positive
The call presented strong financial and operational momentum: double-digit revenue growth, 24% adjusted OIBDA growth, meaningful margin expansion (~230 bps), large improvements in adjusted net income and cash flow, broad-based streaming and physical growth, catalog monetization progress, and strategic AI and distribution initiatives. Challenges were relatively limited and included APAC underperformance, an uneven ad environment across partners, a meaningful debt load (net debt $4.0B), and the fact that some growth was aided by pricing and easier comps. Several strategic initiatives (catalog JV deployments, Revelator acquisition, AI licensing like Suno) are positioned to drive future upside but have limited current-quarter contribution. Overall, positives substantially outweigh the negatives.Positive Updates
Strong Top-Line Growth
Total revenue increased 12% year-over-year (constant currency) for the quarter, driven by double-digit growth across recorded music and music publishing.
Negative Updates
APAC Underperformance
Management noted market share gains were broad-based except for APAC, where they recently appointed a new leader, indicating that region is currently lagging.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Top-Line Growth
Total revenue increased 12% year-over-year (constant currency) for the quarter, driven by double-digit growth across recorded music and music publishing.
Read all positive updates
Company Guidance
Management reiterated a clear quantitative framework: a sustainable growth model targeting high single‑digit total revenue growth, double‑digit adjusted OIBDA and adjusted EPS growth, 50–60% operating cash‑flow conversion of adjusted OIBDA, and fiscal‑2026 margin expansion of 150–200 basis points (now expected at the high end), with short‑term margins in the mid‑20s and long‑term margins in the high‑20s. They pointed to strong near‑term momentum—Q2 totals: revenue +12%, recorded music +13%, subscription streaming +15% (with ~3 ppt from PSM increases; subscriber growth ~6–7%, market‑share ~3 ppt, easier comps ~2–3 ppt), ad‑supported streaming +11%, music publishing +10%, adjusted OIBDA +24% with +230 bps margin expansion, adjusted EPS $0.44 (+38%), adjusted net income +41%, operating cash flow +83% in Q2 and H1 conversion at 66% of adjusted OIBDA—and said AI partnerships (e.g., Suno) will begin to contribute materially in fiscal 2027. They also reaffirmed disciplined capital allocation: continued dividends and buybacks, ~20% target returns on investments, $650M deployed of $1.65B JV capacity for catalogs, cash $741M, total debt $4.7B, and net debt $4.0B.Warner Music Group Financial Statement Overview
Summary
Income Statement
73
Positive
Balance Sheet
58
Neutral
Cash Flow
82
Very Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.13B | 6.71B | 6.43B | 6.04B | 5.92B | 5.30B |
| Gross Profit | 3.27B | 3.08B | 3.07B | 2.86B | 2.84B | 2.56B |
| EBITDA | 1.25B | 1.11B | 1.09B | 1.08B | 1.20B | 884.00M |
| Net Income | 452.00M | 365.00M | 435.00M | 430.00M | 551.00M | 304.00M |
Balance Sheet | ||||||
| Total Assets | 10.61B | 9.83B | 9.15B | 8.54B | 7.83B | 7.21B |
| Cash, Cash Equivalents and Short-Term Investments | 741.00M | 532.00M | 694.00M | 641.00M | 584.00M | 499.00M |
| Total Debt | 4.94B | 4.61B | 4.29B | 4.26B | 4.01B | 3.68B |
| Total Liabilities | 9.64B | 9.07B | 8.48B | 8.12B | 7.66B | 7.17B |
| Stockholders Equity | 738.00M | 647.00M | 518.00M | 307.00M | 152.00M | 31.00M |
Cash Flow | ||||||
| Free Cash Flow | 675.00M | 539.00M | 638.00M | 446.00M | 416.00M | 64.00M |
| Operating Cash Flow | 851.00M | 678.00M | 754.00M | 687.00M | 742.00M | 638.00M |
| Investing Cash Flow | -666.00M | -340.00M | -311.00M | -300.00M | -824.00M | -638.00M |
| Financing Cash Flow | -83.00M | -497.00M | -396.00M | -325.00M | 188.00M | -61.00M |
Warner Music Group Technical Analysis
Positive
30.25
Price Trends
28.72
Positive
28.98
Positive
30.06
Positive
Market Momentum
1.67
Negative
71.90
Negative
75.20
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 30.25 is below the 20-day moving average (MA) of 31.51, above the 50-day MA of 28.72, and above the 200-day MA of 30.06, indicating a bullish trend. The MACD of 1.67 indicates Negative momentum. The RSI at 71.90 is Negative, neither overbought nor oversold. The STOCH value of 75.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WMG.
Warner Music Group Risk Analysis
Warner Music Group disclosed 43 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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $18.11B | 18.11 | 67.11% | 2.47% | 12.55% | -0.50% | |
73 Outperform | $9.72B | 7.91 | 7.33% | 3.74% | -0.28% | ― | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
57 Neutral | $669.12M | 56.34 | 2.64% | ― | 8.41% | -17.11% | |
48 Neutral | $28.64M | ― | -205.22% | ― | 27.16% | -18.55% | |
44 Neutral | $16.01M | -1.68 | -55.09% | ― | 17.92% | 86.34% |
* Communication Services Sector Average
WMG
Warner Music Group
34.72
9.04
35.23%
SIRI
Sirius XM Holdings
28.89
7.67
36.16%
DLPN
Dolphin Entertainment
1.23
0.15
13.89%
ANGH
Anghami Inc.
3.16
-2.34
-42.55%
RSVR
Reservoir Media
10.20
2.40
30.77%
Warner Music Group Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
Warner Music Group Posts Strong Fiscal Q2 Streaming Growth
Positive
May 7, 2026
Warner Music Group Corp., a major player in recorded music and music publishing, reported strong fiscal second-quarter results for the period ended March 31, 2026, highlighted by double-digit revenue growth and robust margin expansion driven by st...
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...
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.