Warner Music Group Corp. engages in the publishing and recording of music. It operates through the Recorded Music and Music Publishing segments. The Recorded Music segment involves in selling, marketing, distributing, and licensing of recorded music produced by the company's recording artists. The Music Publishing segment acts as a copyright owner and/or administrator of the musical compositions and generates revenues related to the exploitation of musical compositions. The company was founded on November 21, 2003 and is headquartered in New York, NY.
WMG Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Warner Music Group Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Warner Music Group Corp ranked in the 25th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. The most interesting components of our discounted cash flow analysis for Warner Music Group Corp ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 81. Its equity weight surpasses that of 71.76% of free cash flow generating stocks in the Consumer Cyclical sector.
Warner Music Group Corp's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than just 0% of US stocks with positive free cash flow.
Warner Music Group Corp's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -2.56. This coverage rate is greater than that of merely 16.5% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
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When Warner Music Group (WMG) went public (again) this June at $25 per share, the market was certainly intrigued. Most other music recording companies are part of larger media conglomerates, and Warner Music Group to this day remains the only pure-play publicly traded music recording company. The bullish case for...
Gary Alexander on Seeking Alpha | September 15, 2020
In a year that investors have been so starved for new IPOs that virtually every new issuance zoomed higher right out of the gate, investors have so far been pretty reticent on Warner Music Group (WMG), the music recording powerhouse that is one of the biggest publishing labels in the...