Warner Music Group Corp. (WMG)
UndervaluedFundamental
82
Price
$27.61
Market Cap
$14.28B
Part 1 · What the company is worth
Overview
Warner Music Group signs recording artists and songwriters, then owns or controls the rights to their recordings and compositions for decades. Recorded Music, built around labels like Atlantic and Warner Records, earns royalties whenever a song streams, plays or sells. Music Publishing owns the underlying songwriting rights and collects a separate royalty whenever those songs are performed, synced into film and TV, or recorded by anyone. It is one of only three companies — alongside Universal and Sony — that control most of the world's recorded music catalog.
How it makes money
Streaming is the dominant source of revenue: digital services pay Warner a share of subscription and advertising revenue, or a per-stream rate, based on negotiated licensing deals. Because the company owns decades of back catalog, much of this income keeps arriving with little new spending — an old hit streamed today still pays a royalty today. Music Publishing works the same way but on the composition side, collecting whenever a song is used, not just when the original recording plays.
Revenue by segment
Owning and licensing sound recordings from artists on Atlantic, Warner Records and other labels, monetized through streaming, downloads and physical sales.
Owning songwriting and composition rights, collecting royalties when songs are performed, synced to film and TV, or covered by other artists.
Competitive moat
Patents and licences · NarrowA catalog of owned master recordings and publishing rights keeps paying royalties for decades after the original spending on an artist, which a new entrant cannot buy quickly. But Warner competes against two labels of similar scale, Universal and Sony, so the advantage comes from being one of few, not from being unique.
What drives demand
Moderately cyclicalMusic streaming subscriptions are a relatively small, sticky household expense that tends to survive economic downturns better than discretionary entertainment spending, so demand is fairly resilient. Advertising-supported streaming and physical/merchandise sales are more exposed to consumer spending cycles, and a weak year for new superstar releases can also soften growth independent of the economy.
Key risks
- Dependence on a few streaming platforms — Spotify, Google/YouTube and Apple together accounted for about 43% of fiscal 2025 revenue; a change in their pricing or royalty terms could materially reduce revenue.
- Digital piracy — The company identifies organized, industrial-scale piracy as a continuing threat that diverts listening away from paid and licensed channels.
- Retaining artists and songwriters — Future growth depends on signing and keeping successful recording artists and songwriters, and on having superstar releases in any given year — neither of which is guaranteed.
- Rates set by regulators and collecting societies — A meaningful share of revenue is subject to rates set by government bodies or local collecting societies rather than freely negotiated, which can cap profitability regardless of demand.
Customer concentration
Top customers account for 43% of revenue
A limited number of digital music services — Spotify, Google/YouTube and Apple among them — together accounted for approximately 43% of fiscal 2025 revenue, so a dispute with any one of them is not a minor event.
The case for
Buyers argue that owning a decades-deep catalog of masters and publishing rights produces royalties with almost no incremental cost, that streaming still has room to grow globally, and that being one of only three major labels gives Warner real leverage in negotiating terms with platforms.
The case against
Sellers fear that a handful of streaming platforms have enough bargaining power to squeeze per-stream payouts over time, that piracy and rate-regulated income cap upside, and that a run of weak new releases can hurt results in ways a deep catalog cannot fully offset.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
No editorial profile for this company yet
No competitor list for this company yet.
Balance Sheet & Liquidity
Revenue
$7.30B
Trailing 12 months (through 6/30/2026)
Net Income
$672M
Trailing 12 months (through 6/30/2026)
Free Cash Flow
$539M
Total Equity
$647M
Total Liabilities
$9.07B
Current Ratio
0.73
Interest Coverage
5.52
Debt/EBITDA
4.60
Earnings Per Share
No EPS data available
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$2147777.00
Current Price
$27.61
Margin of Safety
+100.0%
Fair Value Range
$1396055.00 - $2899498.80
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
21.10
ROE
56.4%
P/B Ratio
0.00
P/FCF
0.00
Gross Margin
45.8%
ROIC
12.6%
Profitability Radar
Value Creation (Economic Moat)
ROIC
12.6%
WACC
9.6%
ROIC − WACC
+2.9 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (16)
- ROIC 12.6%
- Gross Margin 45.8%
- P/FCF 0.00
- P/B Ratio 0.00
- Operating Margin 13.7%
- Positive Free Cash Flow
- CapEx intensity
- Interest Coverage
- Debt/EBITDA
- Return on Tangible Assets
- DCF valuation (Undervalued)
- ROE 90.8%
- Revenue Growth 5Y 8.5%
- Analyst Consensus 78% Buy
- Earnings Quality (OCF/NI) 1.40
- Net Margin Trend 9.2% vs 4.6%
Failed (6)
- Price CAGR -5.44%
- Debt/Equity ratio
- Current Ratio
- Low reliance on intangibles
- Earnings Surprise avg -2.2%
- Piotroski F-Score 4/9
Unavailable (5)
- EPS data insufficient
- Dividend Payout NaN%
- Price below Graham Number
- PEG Ratio (need PE > 0 and growth > 0)
- Share Dilution (missing shares data)
Piotroski F-Score
Mixed signals: some areas need attention
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Robert Kyncl | President, CEO & Director | 54 |
| Ms. Carletta Higginson | Executive VP & Chief Digital Officer | 47 |
| Mr. Armin Zerza | Executive Officer | 55 |
| Mr. Guy Moot | Co-Chair & CEO of Warner Chappell Music | 59 |
| Ms. Carianne Marshall | Co-Chair & COO of Warner Chappell Music | 47 |
| Mr. Louis Dickler | Acting CFO, Senior VP, Global Controller & Chief Accounting Officer | 47 |
| Mr. Tom Corson | Chief Operating Officer | - |
| Mr. Leho Nigul | Chief Technology Officer | - |
| Mr. Kareem Chin | Senior VP & Head of Investor Relations | - |
| Mr. Paul Martin Robinson Esq., J.D. | Executive VP & General Counsel | 67 |
Audit Risk
4
Board Risk
9
Compensation Risk
7
Shareholder Rights Risk
10
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2025-11-20
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-08-05
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-09-25
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for WMG, sourced from Markets Gazette.
- 5/8/2026POSITIVEWarner Music Hits All The Right Notes With Blowout Quarter, Analyst Says More Growth Ahead
Warner Music Group (WMG) shares surged following a robust Q2 performance that significantly surpassed Wall Street's expectations for both earnings and revenue. The company's strong growth in streaming services, coupled with notable margin expansion, has positioned it favorably. This blowout quarter, highlighted by positive analyst ratings including an initiation of coverage with a 'Buy' from Deutsche Bank and an 'Outperform' from Credit Suisse, suggests continued upward momentum. Investors are likely to see this as a strong indicator of WMG's operational efficiency and market resilience, potentially driving further stock appreciation.
- 4/1/2026POSITIVEWarner Music Targets Indie Boom With Revelator Buyout
Warner Music Group (WMG) has announced the acquisition of Revelator, a music technology company specializing in rights management and label services. This strategic move aims to bolster WMG's capabilities in serving independent artists and labels, enhancing its digital infrastructure for royalty distribution and metadata management. The acquisition is expected to streamline operations and unlock new revenue streams within the rapidly growing independent music sector. For investors, this acquisition signals WMG's commitment to innovation and expansion in a key growth area, potentially leading to increased market share and improved profitability.
via Markets Gazette