Understanding the Basics of TME Investing

Now trading at a price of $11.85, Tencent Music Entertainment has moved 2.3% so far today.

Tencent Music Entertainment returned gains of 53.3% last year, with its stock price reaching a high of $11.95 and a low of $5.7. Over the same period, the stock outperformed the S&P 500 index by 26.7%. More recently, the company's 50-day average price was $10.32. Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. The Large-Cap Consumer Discretionary company is headquartered in Shenzhen, China. Tencent Music Entertainment has not offered a dividend during the last year.

Generally Positive Cash Flows but Slimmer Gross Margins to the Industry Average of 40.03%:

2017 2018 2019 2020 2021 2022
Revenue (M) $10,981 $18,985 $25,434 $29,153 $31,244 $28,339
Gross Margins 35% 38% 34% 32% 30% 31%
Net Margins 12% 10% 16% 14% 10% 14%
Net Income (M) $1,319 $1,832 $3,977 $4,176 $3,215 $3,839
Net Interest Expense (M) n/a $35 $64 $97 $121 $108
Free Cash Flow (M) $2,500 $5,632 $6,200 $4,885 $5,239 $7,481
Current Ratio 2.12 3.33 3.17 3.3 2.56 2.27

an Exceptionally Low P/B Ratio but Too Expensive:

Tencent Music Entertainment has a trailing twelve month P/E ratio of 24.6, compared to an average of 22.96 for the Consumer Discretionary sector. Based on its EPS guidance of $0.73, the company has a forward P/E ratio of 14.1. In contrast, the market is likely undervaluing Tencent Music Entertainment in terms of its equity because its P/B ratio is 0.33 while the sector average is 4.24. The company's shares are currently trading 24.8% below their Graham number.

Tencent Music Entertainment Has an Average Rating of Buy:

The 27 analysts following Tencent Music Entertainment have set target prices ranging from $7.5 to $15.0 per share, for an average of $12.01 with a buy rating. The company is trading -1.3% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Tencent Music Entertainment has an average amount of shares sold short because 2.1% of the company's shares are sold short. Institutions own 50.6% of the company's shares, and the insider ownership rate stands at 0.0%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 5% stake in the company is worth $489,098,330.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.