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Warner Music Group
(NASDAQ:WMG)
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Rating:65Neutral
Price Target:
$34.00
▲(21.17% Upside)
Action:Reiterated
Date:09/26/26
The score is driven primarily by strong earnings-call execution and reaffirmed growth/margin targets, supported by improving profitability and rising free cash flow. Offsetting factors are meaningful leverage and only mixed technical momentum, while valuation is reasonable with a supportive dividend yield but not clearly cheap.
Positive Factors
Recurring rights-based business model and catalog monetization
WMG’s ownership and administration of recordings and compositions creates multiple monetization channels, including streaming, performance, synchronization, and licensing. The continuing use of its catalog can support recurring revenue beyond individual releases and provides durable economic value across changing formats and platforms.
Negative Factors
Elevated and rising leverage
WMG’s substantial debt burden remains a durable constraint despite stronger cash generation. High net debt increases dependence on consistent operating cash flow, limits financial flexibility for acquisitions or investment, and can make earnings and capital allocation more sensitive to any sustained weakening in the business.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring rights-based business model and catalog monetization
WMG’s ownership and administration of recordings and compositions creates multiple monetization channels, including streaming, performance, synchronization, and licensing. The continuing use of its catalog can support recurring revenue beyond individual releases and provides durable economic value across changing formats and platforms.
Read all positive factors
Warner Music Group Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Warner Music Group is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Warner Music Group is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyWarner Music Group (WMG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$16.45B
Dividend Yield2.45%
Average Volume (3M)2.36M
Price to Earnings (P/E)24.4
Beta (1Y)0.91
Revenue Growth12.91%
EPS Growth125.41%
CountryUS
Employees5,500
SectorCommunication Services
Sector Strength97
IndustryEntertainment
Share Statistics
EPS (TTM)1.29
Shares Outstanding147,729,460
10 Day Avg. Volume2,593,125
30 Day Avg. Volume2,361,874
Financial Highlights & Ratios
PEG Ratio-3.11
Price to Book (P/B)27.32
Price to Sales (P/S)2.64
P/FCF Ratio32.80
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue2.56
Enterprise Value/Gross Profit5.60
Enterprise Value/Ebitda12.95
Forecast
1Y Price Target
$37.73Price Target Upside34.45% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)1.8
Revenue Forecast (FY)$7.79B
Warner Music Group Business Overview & Revenue Model
Company Description
Warner Music Group Corp. (WMG), established in 1929 and based in New York City, functions as a prominent global entertainment enterprise primarily focused on music. Its operations span the United States, the United Kingdom, Germany, and numerous o...
How the Company Makes Money
WMG makes money by monetizing music rights across recorded music and music publishing, primarily through licensing and distribution arrangements with digital platforms and other commercial users.
1) Recorded music revenue (monetization of sound r...
Warner Music Group Earnings Call Summary
Earnings Call Date:Aug 05, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Nov 19, 2026
Earnings Call Sentiment Positive
The call highlighted strong top- and bottom-line growth, significant margin expansion, very strong operating cash flow improvement, and progress on strategic initiatives including AI licensing, catalog acquisitions, and distribution expansion. Challenges noted were manageable: elevated net debt, a CFO transition, some non-recurring drivers in ad revenue, minor declines in select licensing/performance lines, and operational complexity around AI permissioning. On balance the positive financial performance, reaffirmed targets, and concrete strategic progress substantially outweigh the limited headwinds.Positive Updates
Top-Line Revenue Growth
Total revenue grew 9% year-over-year (11% on an adjusted basis), driven by strength across recorded music, publishing, physical, and distribution.
Negative Updates
High Leverage
Total debt remains elevated at $4.7 billion with net debt of $4.1 billion as of June 30, 2026, which represents a financial leverage consideration despite stronger cash generation.
Read all updates
Q3-2026 Updates
Positive
Negative
Top-Line Revenue Growth
Total revenue grew 9% year-over-year (11% on an adjusted basis), driven by strength across recorded music, publishing, physical, and distribution.
Read all positive updates
Company Guidance
Warner reiterated guidance for high single‑digit consolidated revenue growth, double‑digit Adjusted OIBDA and Adjusted EPS growth, 50–60% operating cash‑flow conversion, and margin expansion at the high end of a 150–200 basis‑point range for fiscal 2026 (targeting mid‑20s margins near term and high‑20s longer term). Management said Q3 underpins that outlook: total revenue +9% (11% adjusted), recorded‑music subscription streaming +12% (adjusted) — with ~3.5 percentage points from PSM increases, ~6–7 points from subscriber growth and ~1 point from market‑share — recorded‑music Adjusted OIBDA +16% (margin 25.3%, +150 bps), music publishing revenue +11% with Adjusted OIBDA +14% (margin 28.9%, +70 bps), company Adjusted OIBDA +15% (+18% adjusted) with margin expansion of 100 bps (130 bps adjusted); ad‑supported streaming +10% (adjusted), physical +17%, artist services/expanded rights +15%, licensing −1%; operating cash flow +209% in Q3 and nine‑month conversion of 55% of Adjusted OIBDA, cash $618m, total debt $4.7bn and net debt $4.1bn. They also noted continued PSM flow‑through and an expected slightly accelerated Q4 (including the Apple renewal), $650m deployed in the Bain catalog JV (of $1.65bn capacity), planned cost‑savings on track ($200m in 2026, $300m annualized in 2027) and that AI licensing deals should contribute materially starting fiscal 2027.Warner Music Group Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
46
Neutral
Cash Flow
71
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.30B | 6.71B | 6.43B | 6.04B | 5.92B | 5.30B |
| Gross Profit | 3.34B | 3.08B | 3.07B | 2.86B | 2.84B | 2.56B |
| EBITDA | 1.45B | 1.03B | 1.09B | 1.08B | 1.20B | 884.00M |
| Net Income | 672.00M | 365.00M | 435.00M | 430.00M | 551.00M | 304.00M |
Balance Sheet | ||||||
| Total Assets | 10.73B | 9.83B | 9.15B | 8.54B | 7.83B | 7.21B |
| Cash, Cash Equivalents and Short-Term Investments | 618.00M | 532.00M | 694.00M | 641.00M | 584.00M | 499.00M |
| Total Debt | 4.92B | 4.61B | 4.29B | 4.26B | 4.01B | 3.68B |
| Total Liabilities | 9.64B | 9.07B | 8.48B | 8.12B | 7.66B | 7.17B |
| Stockholders Equity | 854.00M | 647.00M | 518.00M | 307.00M | 152.00M | 31.00M |
Cash Flow | ||||||
| Free Cash Flow | 814.00M | 539.00M | 638.00M | 446.00M | 416.00M | 64.00M |
| Operating Cash Flow | 947.00M | 678.00M | 754.00M | 687.00M | 742.00M | 638.00M |
| Investing Cash Flow | -611.00M | -340.00M | -311.00M | -300.00M | -824.00M | -638.00M |
| Financing Cash Flow | -232.00M | -497.00M | -396.00M | -325.00M | 188.00M | -61.00M |
Warner Music Group Technical Analysis
Positive
28.06
Price Trends
28.06
Positive
27.89
Positive
28.30
Positive
Market Momentum
0.92
Negative
73.06
Negative
89.73
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WMG, the sentiment is Positive. The current price of 28.06 is below the 20-day moving average (MA) of 28.70, above the 50-day MA of 28.06, and below the 200-day MA of 28.30, indicating a bullish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 73.06 is Negative, neither overbought nor oversold. The STOCH value of 89.73 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WMG.
Warner Music Group Risk Analysis
Warner Music Group disclosed 43 risk factors in its most recent earnings report. Warner Music Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Warner Music Group Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $3.82B | 57.79 | 5.95% | ― | 12.52% | 82.30% | |
65 Neutral | $16.45B | 24.37 | 90.84% | 2.45% | 12.91% | 125.41% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
58 Neutral | $41.19B | -158.49 | 73.28% | ― | 10.75% | -146.20% | |
52 Neutral | $627.66M | 69.44 | 2.34% | ― | 11.41% | 15.57% | |
48 Neutral | $4.05B | -49.81 | -3.17% | ― | 17.17% | -187.98% | |
42 Neutral | $30.37M | -0.25 | -205.22% | ― | 27.16% | -18.55% |
* Communication Services Sector Average
WMG
Warner Music Group
31.44
-1.06
-3.27%
LYV
Live Nation Entertainment
174.34
21.01
13.70%
SPHR
Sphere Entertainment
114.07
48.92
75.09%
ANGH
Anghami Inc.
3.35
0.55
19.64%
RSVR
Reservoir Media
9.52
2.02
26.93%
MSGE
Madison Square Garden Entertainment Corp.
80.33
34.70
76.05%
Warner Music Group Corporate Events
Business Operations and StrategyExecutive/Board Changes
Warner Music Group Strengthens Leadership With New Managing Director
Positive
Sep 25, 2026
On September 24, 2026, Warner Music Inc., a subsidiary of Warner Music Group, entered into an employment agreement with board member Valentin Blavatnik, appointing him Managing Director of Warner Recorded Music for North America and the U.K., as w...
Business Operations and StrategyExecutive/Board Changes
Warner Chappell Music Announces Planned Executive Leadership Transition
Neutral
Sep 22, 2026
On September 21, 2026, Warner Music Group announced that Carianne Marshall will step down as Co-Chair and Chief Operating Officer of its publishing arm, Warner Chappell Music, effective September 30, 2026, and remain through January 8, 2027, to pr...
Executive/Board ChangesRegulatory Filings and Compliance
Warner Music Group Appoints Acting CFO During Transition
Neutral
Sep 4, 2026
On July 31, 2026, Warner Music Group Corp. appointed Louis Dickler as Acting Chief Financial Officer while he continued to serve as Senior Vice President, Global Controller Chief Accounting Officer. In connection with this expanded role, Warner M...
Business Operations and StrategyDividendsFinancial Disclosures
Warner Music Group Reports Strong Fiscal Q3 Results
Positive
Aug 5, 2026
On August 5, 2026, Warner Music Group reported its fiscal third-quarter results for the period ended June 30, 2026, posting a 10% year-over-year increase in total revenue to $1.86 billion, driven by both recorded music and publishing. Net income s...
Business Operations and StrategyFinancial DisclosuresRegulatory Filings and Compliance
Warner Music Advances Q3 Earnings Release and Disclosure
Positive
Aug 3, 2026
Warner Music Group announced that it would release its financial results for the third quarter ended June 30, 2026, on Wednesday, August 5, 2026, moving the date forward from the previously scheduled August 6, 2026. The company will host an earnin...
Business Operations and StrategyExecutive/Board Changes
Warner Music Announces CFO and COO Leadership Changes
Neutral
Jul 31, 2026
On July 31, 2026, Warner Music Group announced that Chief Financial Officer and Chief Operating Officer Armin Zerza stepped down from his roles for personal reasons, though he will remain available through the end of the fiscal year to support a s...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.