Warner Music Group (WMG) AI Stock Analysis

• Market Cap: $17.10B
• Dividend Yield: 2.2%
• Average Volume (3M): 2.27M
• Price to Earnings (P/E): 58.6
• Beta (1Y): 0.76
• Revenue Growth: 1.36%
• EPS Growth: -45.79%
• Country: US
• Employees: 5,800
• Sector: Communication Services
• Sector Strength: 96
• Industry: Entertainment
• EPS (TTM): -0.03
• Shares Outstanding: 145,886,570
• 10 Day Avg. Volume: 2,000,292
• 30 Day Avg. Volume: 2,269,763
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.08
• Enterprise Value/Revenue: 2.86
• Enterprise Value/Gross Profit: 6.14
• Enterprise Value/Ebitda: 19.51
• 1Y Price Target: $34.53
• Price Target Upside: 5.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

• Rating: 71 Outperform
• Price Target: $35.00 ▲(6.67% Upside)

Warner Music Group's overall stock score of 71 reflects a mix of solid financial performance and positive technical indicators, tempered by high valuation concerns. The company's strategic initiatives and market share gains are promising, but high leverage and cash flow issues pose risks. The stock's current momentum is strong, but investors should be cautious of potential overvaluation.

Positive Factors

Cost Efficiency

A strategic restructuring program is expected to deliver annualized run rate savings of $300 million by the end of FY27.

Financial Performance

Warner Music Group reported solid results which were above revenue and adjusted OIBDA expectations.

Strategic Agreements

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

Negative Factors

Foreign Exchange Impact

EPS falls as a result of FX swings including losses on euro-denominated debt in Q3.

Market Challenges

WMG has been mired by several unexpected headwinds over the last 12-18 months, leading to downward estimate revisions and shares trading near trough multiples.

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 stable 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.

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: Positive
• Last Price: 32.81
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• 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 32.81 is above the 20-day moving average (MA) of 32.60, above the 50-day MA of 30.75, and above the 200-day MA of 30.34, indicating a bullish trend. The MACD of 0.80 indicates Positive momentum. The RSI at 57.81 is Neutral, neither overbought nor oversold. The STOCH value of 28.86 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
WMG	71 Outperform	$17.10B	58.63	54.66%	2.20%	1.36%	-45.79%
RSVR	68 Neutral	$514.64M	68.86	2.09%	―	9.65%	38433.33%
Sector *	60 Neutral	$46.28B	4.13	-13.12%	4.13%	1.85%	-42.71%
SIRI	57 Neutral	$7.78B	―	-38.19%	4.58%	-3.75%	-253.95%
DLPN	49 Neutral	$14.44M	―	-101.62%	―	4.84%	-9.71%
ANGH	41 Neutral	$20.86M	―	-270.84%	―	88.72%	-85.54%
KUKE	41 Neutral	$9.80M	―	-218.47%	―	-36.94%	15.41%

Warner Music Group Corporate Events

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.

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.