One-glance verdict
Undervalued
$35.21 our estimate vs market $26.39
Wall Street consensus: $36.88 (4.7% higher than our fair-value estimate)
25% below our estimate, below the bear case
Fundamentals snapshot
Warner Music Group Corp.
WMG · NMS · Communication Services · Entertainment
Current price
$26.39
52-week range
$23.34 - $35.42
Market cap
$13.80B
Balance sheet
Distressed
5.73x Adequate
Net debt $4.30B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 8.9% last year.
- Reward Returns 70.1% on equity, ahead of 80% of its peers.
- Risk Net debt grew 18.9% over 3 years.
- Risk Insider ownership is only 0.8% (peer median: 18.3%).
What this company does
Warner Music Group Corp.
Warner Music Group is a major music company that makes money in two main ways: by promoting recording artists and selling their songs, and by owning the rights to the underlying music and lyrics themselves. The company collects a royalty (a usage fee) whenever one of its millions of songs is streamed, played in a movie, or used on the radio. This matters because the rise of streaming provides a steady income, and its huge catalog of classic songs can keep earning money for decades with very little additional cost.
How the company got here
Originally started by the Warner Bros. movie studio in 1958 to keep its actors from recording music for rival companies, the company grew by acquiring other record labels. A key moment was buying Reprise Records from Frank Sinatra in 1963, which brought in legendary executive Mo Ostin who shaped the company's success. After being part of larger media conglomerates like Time Warner for many years, it was sold to private investors in 2004 and then to its current owner, Access Industries, in 2011. This forced the company to adapt from selling CDs to focusing on digital streaming, becoming a major force in the modern music economy.
What it actually does
Warner Music Group is one of the three largest music companies in the world, alongside Sony and Universal Music Group. It discovers, develops, and promotes recording artists and songwriters, managing everything from recording to marketing and distribution. You would recognize its work through famous record labels like Atlantic Records, Warner Records, and Elektra, which are home to artists like Ed Sheeran, Cardi B, and Bruno Mars. The company makes money by selling music in various formats, but increasingly earns revenue (money a company receives from selling its products or services) from streaming platforms, licensing songs for movies and TV shows, and selling merchandise.
Recorded Music
This is the largest part of the company, making up about 80% of its business. This segment signs artists to its famous record labels, like Atlantic and Warner Records, and then helps them record, promote, and distribute their music globally. The company earns money from this division through streams on services like Spotify and Apple Music, digital downloads, physical sales of CDs and vinyl records, and licensing the master recordings for use in commercials, films, and video games. Essentially, this is the part of the business that turns an artist's performance into a product you can listen to.
Music Publishing
This smaller but significant part of the company, known as Warner Chappell Music, owns and manages the rights to the musical compositions themselves—the melody and lyrics of a song. Instead of representing the recording of a song, this division represents the songwriter. It makes money by collecting royalties (payments made for the right to use something) whenever a song is played on the radio, streamed, performed live, or used in a movie or TV show, which is known as a synchronization fee. This business provides a steady stream of income because a single song can be recorded by many different artists and used in many different ways over the years.
What management is betting on now
The company's leadership is focused on growing its business through digital streaming, which has become the most important way people listen to music. They are also concentrating on expanding in emerging international markets where smartphone use and streaming are growing rapidly. A major priority is what they call "superfan monetization," which means finding new ways for artists to earn money from their most loyal followers through exclusive content, merchandise, and experiences. Additionally, the company is embracing new technologies like artificial intelligence (AI) by partnering with AI companies to create new revenue streams and ensure artists are paid when their work is used.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$271.00M
FY2025 Q1
$296.00M
FY2025 Q2
$33.00M
FY2025 Q3
$7.00M
FY2025 Q4
$203.00M
FY2026 Q1
$420.00M
FY2026 Q2
$99.00M
FY2026 Q3
$114.00M
Revenue
$1.86B
Net income
$204.00M
Diluted EPS
—
Operating cash flow
$142.00M
Free cash flow
$114.00M
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Sources
Revenue
$1.73B
Net income
$183.00M
Diluted EPS
—
Operating cash flow
$126.00M
Free cash flow
$99.00M
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Sources
Revenue
$1.84B
Net income
$176.00M
Diluted EPS
—
Operating cash flow
$440.00M
Free cash flow
$420.00M
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Sources
Revenue
$1.87B
Net income
$109.00M
Diluted EPS
—
Operating cash flow
$231.00M
Free cash flow
$203.00M
Fetching…
Sources
Revenue
$1.69B
Net income
$-16.00M
Diluted EPS
—
Operating cash flow
$46.00M
Free cash flow
$7.00M
Fetching…
Sources
Revenue
$1.48B
Net income
$36.00M
Diluted EPS
—
Operating cash flow
$69.00M
Free cash flow
$33.00M
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Sources
Revenue
$1.67B
Net income
$236.00M
Diluted EPS
—
Operating cash flow
$332.00M
Free cash flow
$296.00M
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Sources
Revenue
$1.63B
Net income
$41.00M
Diluted EPS
—
Operating cash flow
$304.00M
Free cash flow
$271.00M
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Sources
Is it cheap or expensive?
Fair value $35.21 vs current price $26.39
Wall Street consensus is the average analyst price target: $36.88 (4.7% higher than our fair-value estimate).
Our most-likely fair value is $35.21 a share — about 33.4% above today's price of $26.39, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $4.3B. Interest coverage 5.7x.
Net debt
$4.30B
Interest coverage
5.73x
Warner Music Group Corp.'s profit covers its interest bill about 5.7 times over. which is stronger than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
WMG
BASELINE
Warner Music Group Corp.
Total debt $4.92B Interest coverage 5.73x This is the baseline the peer rows are being compared against.
Total debt $11.86B Interest coverage 43.67x +662% vs WMG Carries about 7.6x more debt cushion than WMG.
Total debt $11.28B Interest coverage 3.90x -32% vs WMG Carries about 1.5x less debt cushion than WMG.
Total debt $9.66B Interest coverage 4.15x -27% vs WMG Carries about 1.4x less debt cushion than WMG.
Total debt $32.02B Interest coverage 0.63x -89% vs WMG Carries about 9.1x less debt cushion than WMG.
What you should know
The case for and against WMG
3 Rewards
2 Risks
Rewards
-
Revenue grew 8.9% last year.
-
Returns 70.1% on equity, ahead of 80% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Net debt grew 18.9% over 3 years.
-
Insider ownership is only 0.8% (peer median: 18.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
21.11x
Forward P/E
13.70x
P/B
21.30x
P/S
1.89x
EV/EBITDA
10.97x
PEG ratio
0.48x
Profitability
How much profit each dollar creates
Gross margin
45.8%
Operating margin
16.7%
Net margin
9.2%
ROE
70.1%
ROA
7.7%
Health
Liquidity and balance-sheet strength
Debt / equity
4.53x
Current ratio
0.73x
Quick ratio
0.50x
Total debt
$4.92B
Total cash
$618.00M
Growth
How the business has been compounding
Revenue TTM
$7.30B
Revenue 5Y CAGR
6.1%
EPS TTM
1.25
EPS 5Y CAGR
-13.3%
Cash flow
How much cash the business throws off
Operating CF TTM
$939.00M
Free CF TTM
$539.00M
FCF margin
7.4%
Dividend
Shareholder payout
Yield
3.0%
Payout ratio
60.8%
Last ex-div date
2026-08-20