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Universal Music Group NV UMG

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Stock XAMS Rating as of
€29.42 +0.19 (0.65%)
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Company Report

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Universal Music: Strong Q1 That Should Improve as TikTok Returns and Cost-Cutting Takes Hold

Matthew Dolgin

Universal Music posted a solid first quarter, with strength across multiple lines of revenue, though currency headwinds damped top-line growth. The firm also announced it has reached an agreement with TikTok that puts Universal’s music back onto TikTok immediately after being off that platform for about three months. With the firm tracking our full-year forecast, excluding currencies, we are maintaining our EUR 31 fair value estimate.

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Price vs Fair Value

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UMG is trading at a 6% discount.
Price
€29.23
Fair Value
€86.00
Uncertainty
High
1-Star Price
€14.47
5-Star Price
€78.50
Economic Moat
Wymxq
Capital Allocation
Rmytftywjb

Bulls Say, Bears Say

Bulls

Music streaming services like Spotify still have a long runway for subscriber growth and price increases, bringing more revenue into the music ecosystem for labels and artists alike.

Bears

Universal Music is overly dependent on streaming services that are diversifying their revenue streams into areas like podcasts. The streaming platforms will demand lower royalty rates in the future as their power grows.

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Trading Information

Previous Close Price
€29.23
Day Range
€29.27–29.49
52-Week Range
€18.29–29.49
Bid/Ask
€28.57 / €29.49
Market Cap
€53.59 Bil
Volume/Avg
747,904 / 1.2 Mil

Key Statistics

Price/Earnings (Normalized)
33.57
Price/Sales
4.85
Dividend Yield (Trailing)
1.74%
Dividend Yield (Forward)
1.85%
Total Yield
1.74%

Company Profile

Universal Music Group is the largest of the three major global record labels, with Sony Music second and Warner Music third. Universal’s largest segment, recorded music, consists of iconic labels like Interscope, Capitol Music, Decca, EMI, and Motown and popular artists such as Drake, Taylor Swift, J Balvin, and Luke Bryan. Universal Music Publishing Group owns and administers almost 4 million compositions and is the second-largest music publisher behind Sony. Universal Music was spun out of Vivendi in September 2021, with 60% distributed to Vivendi shareholders, 20% to Tencent, 10% to Pershing Square Capital, and 10% remaining at Vivendi.
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
SPOT
6758
Price/Earnings (Normalized)
 33.57409.1317.08
Price/Book Value
 17.9716.602.03
Price/Sales
 4.853.911.18
Price/Cash Flow
 33.03104.197.08
Price/Earnings
UMG
SPOT
6758

Financial Strength

Metric
UMG
SPOT
6758
Quick Ratio
 0.431.380.47
Current Ratio
 0.621.420.69
Interest Coverage
 16.96−2.1465.25
Quick Ratio
UMG
SPOT
6758

Profitability

Metric
UMG
SPOT
6758
Return on Assets (Normalized)
 12.87%3.49%2.50%
Return on Equity (Normalized)
 60.80%11.24%11.52%
Return on Invested Capital (Normalized)
 30.80%5.13%6.73%
Return on Assets
UMG
SPOT
6758
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