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Universal Music Group NV UMG

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Stock XAMS Rating as of
€28.03 +0.09 (0.32%)
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Company Report

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Universal and Warner: Strong Competitive Advantages and Music Industry Growth Make Them Attractive

Matthew Dolgin

We’ve reevaluated the major record companies and think these firms will remain critical to artists and are positioned to continue taking their fair share of a growing music industry. For the two pure-play majors, we have upgraded Universal’s moat rating to wide from narrow, and we are maintaining our narrow moat rating for Warner. We’re maintaining our EUR 31 fair value estimate for Universal and raising Warner’s fair value estimate to $37 from $36.

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Price vs Fair Value

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UMG is trading within a range we consider fairly valued.
Price
€28.03
Fair Value
€19.00
Uncertainty
Medium
1-Star Price
€36.87
5-Star Price
€14.90
Economic Moat
Gdfh
Capital Allocation
Pdylynswv

Bulls Say, Bears Say

Bulls

Talent will always be at the core of music industry sales. Record labels are critical for artists to maximize success, and Universal is the best positioned of any record company.

Bears

Record companies’ favorable revenue-sharing agreements with streaming platforms may not allow those platforms to remain viable over the long term and could require concessions.

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Trading Information

Previous Close Price
€27.94
Day Range
€27.90–28.27
52-Week Range
€20.38–29.49
Bid/Ask
€27.07 / €28.10
Market Cap
€51.06 Bil
Volume/Avg
984,096 / 1.1 Mil

Key Statistics

Price/Earnings (Normalized)
32.19
Price/Sales
4.65
Dividend Yield (Trailing)
1.82%
Dividend Yield (Forward)
1.93%
Total Yield
1.82%

Company Profile

Universal Music is the largest of the three major record companies. Recorded music accounts for most of the firm’s revenue, with the segment housing more than a dozen record labels, including notable names like Interscope, Capital Music, Motown Records, and Def Jam. Some of the most successful current artists signed to record deals with Universal include Taylor Swift, Drake, The Weeknd, and Morgan Wallen. Most of Universal’s remaining revenue comes from its publishing segment, which generates revenue for songwriters and composers, including some of Universal’s recording artists as well as songwriters and composers who do not record music themselves or are attached to other labels. Universal’s publishing group has nearly 4.5 million owned or administered titles in its catalog.
Sector
Communication Services
Industry
Entertainment
Stock Style Box
Large Growth
Total Number of Employees
10,290
Website
https://www.universalmusic.com

Competitors

Valuation

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Metric
UMG
6758
WMG
Price/Earnings (Normalized)
 32.1919.1522.02
Price/Book Value
 17.242.2536.28
Price/Sales
 4.651.332.45
Price/Cash Flow
 31.688.9217.24
Price/Earnings
UMG
6758
WMG

Financial Strength

Metric
UMG
6758
WMG
Quick Ratio
 0.430.440.50
Current Ratio
 0.620.660.69
Interest Coverage
 16.9631.035.89
Quick Ratio
UMG
6758
WMG

Profitability

Metric
UMG
6758
WMG
Return on Assets (Normalized)
 12.87%2.86%7.52%
Return on Equity (Normalized)
 60.80%13.24%183.77%
Return on Invested Capital (Normalized)
 30.80%8.27%15.98%
Return on Assets
UMG
6758
WMG
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1-Day Chart
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Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
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DzdvgjxySmxd$15.8 Bil
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GhxqqvptGnckw$15.8 Bil
 Warner Music Group Corp Ordinary Shares - Class A
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QrbftpzhLpjqv$15.7 Bil
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SmjmtdfcpWqyd$15.6 Bil
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