Warner Music Group (WMG) AI Stock Analysis

• Market Cap: $15.33B
• Dividend Yield: 2.52%
• Average Volume (3M): 2.52M
• Price to Earnings (P/E): 42.3
• Beta (1Y): 0.68
• Revenue Growth: 4.37%
• EPS Growth: -16.22%
• Country: US
• Employees: 5,800
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 0.48
• Shares Outstanding: 147,022,750
• 10 Day Avg. Volume: 3,249,757
• 30 Day Avg. Volume: 2,523,144
• PEG Ratio: -8.54
• Price to Book (P/B): 76.40
• Price to Sales (P/S): 7.37
• P/FCF Ratio: 91.71
• Enterprise Value/Market Cap: 1.43
• Enterprise Value/Revenue: 3.28
• Enterprise Value/Gross Profit: 7.15
• Enterprise Value/Ebitda: 21.50
• 1Y Price Target: $36.92
• Price Target Upside: 25.79% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): 1.5
• Revenue Forecast (FY): $6.99B

• Rating: 64 Neutral
• Price Target: $30.00 ▲(2.21% Upside)

Warner Music Group's overall stock score is driven by strong earnings call results and strategic initiatives, which provide a positive outlook despite high valuation and bearish technical indicators. Financial performance shows solid revenue growth, but profitability and cash flow sustainability need attention. The stock's high P/E ratio and bearish technicals suggest caution, but the company's strategic positioning and market share gains offer potential for future growth.

Positive Factors

Revenue Growth

The strong revenue growth indicates robust demand and effective monetization strategies, enhancing Warner Music Group's market position and financial health.

AI Partnerships

The partnership with Suno reflects WMG's strategic focus on leveraging AI for innovation, potentially creating new revenue streams and enhancing competitive advantage.

Market Share Gains

Gaining market share strengthens WMG's competitive position, indicating successful strategies in artist promotion and digital distribution.

Negative Factors

Debt Levels

High debt levels can constrain financial flexibility and increase risk, potentially impacting WMG's ability to invest in growth opportunities.

Margin Decline

Declining margins suggest pressure on profitability, which could affect long-term financial performance if not addressed through cost management or revenue diversification.

Profitability Pressure

Decreasing profitability margins highlight challenges in maintaining cost efficiency and could impact WMG's ability to sustain earnings 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 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 shows solid revenue growth and improved leverage management, but profitability margins have faced pressure. The company demonstrates strong cash generation, though cash flow sustainability needs monitoring.

Income Statement

Warner Music Group has shown consistent revenue growth over the years, with a 3.68% increase in the latest year. The gross profit margin remains strong at 45.85%, although it has slightly decreased from previous years. Net profit margin has decreased to 5.44% from 6.77% last year, indicating some pressure on profitability. EBIT and EBITDA margins have also seen a decline, suggesting increased operational costs or other expenses.

Balance Sheet

The company's debt-to-equity ratio has improved significantly to 0.38 from 8.28 last year, indicating better leverage management. However, the return on equity has decreased to 56.41% from 83.98%, reflecting reduced profitability relative to equity. The equity ratio stands at 6.58%, suggesting a low proportion of equity financing, which could pose risks if debt levels increase.

Cash Flow

Warner Music Group's free cash flow has grown by 24.77%, showing strong cash generation capabilities. The operating cash flow to net income ratio is 1.86, indicating efficient cash conversion from earnings. However, the free cash flow to net income ratio has decreased slightly to 0.79, suggesting a need to monitor cash flow sustainability.

Breakdown	TTM	Dec 2025	Dec 2025	Dec 2024	Dec 2023	Dec 2022
Income Statement
Total Revenue	6.71B	6.71B	6.71B	6.43B	6.04B	5.92B
Gross Profit	3.08B	3.08B	3.08B	3.07B	2.86B	2.84B
EBITDA	1.02B	1.07B	1.07B	1.09B	1.08B	1.20B
Net Income	621.00M	365.00M	365.00M	435.00M	430.00M	551.00M
Balance Sheet
Total Assets	9.83B	9.83B	9.83B	9.15B	8.54B	7.83B
Cash, Cash Equivalents and Short-Term Investments	532.00M	532.00M	532.00M	694.00M	641.00M	584.00M
Total Debt	4.61B	4.61B	4.61B	4.29B	4.26B	4.01B
Total Liabilities	9.07B	9.07B	9.07B	8.48B	8.12B	7.66B
Stockholders Equity	647.00M	647.00M	647.00M	518.00M	307.00M	152.00M
Cash Flow
Free Cash Flow	428.00M	539.00M	539.00M	638.00M	446.00M	416.00M
Operating Cash Flow	678.00M	678.00M	678.00M	754.00M	687.00M	742.00M
Investing Cash Flow	-340.00M	-340.00M	-340.00M	-311.00M	-300.00M	-824.00M
Financing Cash Flow	-497.00M	-497.00M	-497.00M	-396.00M	-325.00M	188.00M

Warner Music Group Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 29.35
• 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 WMG, the sentiment is Neutral. The current price of 29.35 is above the 20-day moving average (MA) of 28.34, below the 50-day MA of 30.10, and below the 200-day MA of 30.03, indicating a neutral trend. The MACD of -0.37 indicates Negative momentum. The RSI at 54.40 is Neutral, neither overbought nor oversold. The STOCH value of 68.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WMG.

Warner Music Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WMG	64 Neutral	$15.33B	42.32	61.97%	2.52%	4.37%	-16.22%
SIRI	64 Neutral	$6.99B	7.49	8.86%	5.20%	-2.80%	―
RSVR	61 Neutral	$491.26M	51.55	2.64%	―	11.17%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
DLPN	53 Neutral	$18.06M	-2.74	-55.09%	―	3.86%	81.68%
ANGH	41 Neutral	$16.58M	-0.22	―	―	88.72%	-85.54%
KUKE	39 Underperform	―	―	―	―	-36.94%	15.41%

Warner Music Group Corporate Events

Warner Music Group Amends CEO Compensation Agreement

On November 24, 2025, Warner Music Group Corp. amended the employment agreement with CEO Robert Kyncl, focusing on stock options and performance share units. The amendment outlines a $10 million stock option award divided into three tranches, each with specific performance conditions tied to shareholder return, and a $5 million annual performance share unit award starting in January 2026. These changes are designed to align executive compensation with company performance and shareholder value.

Warner Music Group Declares Quarterly Dividend Announcement

On November 7, 2025, Warner Music Group announced a regular quarterly cash dividend of $0.19 per share for its Class A and Class B Common Stock, payable on December 2, 2025, to shareholders recorded by November 19, 2025. This decision reflects the company’s ongoing commitment to providing shareholder value and may influence its financial strategy and stakeholder relations.