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Universal Music Group NV UMG

Morningstar Rating
€28.83 +0.15 (0.52%)
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Company Report

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

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.

Price vs Fair Value

UMG is trading within a range we consider fairly valued.
Price
€28.83
Fair Value
€58.00
Uncertainty
High
1-Star Price
€35.88
5-Star Price
€93.90
Economic Moat
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Capital Allocation
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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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News

Trading Information

Previous Close Price
€28.68
Day Range
€28.4328.84
52-Week Range
€18.3429.49
Bid/Ask
€28.35 / €28.85
Market Cap
€52.51 Bil
Volume/Avg
856,209 / 1.2 Mil

Key Statistics

Price/Earnings (Normalized)
33.11
Price/Sales
4.78
Dividend Yield (Trailing)
1.76%
Dividend Yield (Forward)
1.86%
Total Yield
1.78%

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

Competitors

Valuation

Metric
UMG
6758
SPOT
Price/Earnings (Normalized)
33.1117.93423.01
Price/Book Value
17.732.0417.17
Price/Sales
4.781.204.05
Price/Cash Flow
32.588.07107.73
Price/Earnings
UMG
6758
SPOT

Financial Strength

Metric
UMG
6758
SPOT
Quick Ratio
0.430.471.38
Current Ratio
0.620.691.42
Interest Coverage
16.9665.25−2.14
Quick Ratio
UMG
6758
SPOT

Profitability

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