Tencent Music Entertainment in Brief

Tencent Music Entertainment shares fell by -3.9% during the day's afternoon session, and are now trading at a price of $14.45. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

an Exceptionally Low P/B Ratio but Trading Above Its Fair Price:

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 company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.06 and an average price to book (P/B) ratio of 3.18. In contrast, Tencent Music Entertainment has a trailing 12 month P/E ratio of 31.4 and a P/B ratio of 0.38.

Tencent Music Entertainment's PEG ratio is 59.33, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Generally Positive Cash Flows but Slimmer Gross Margins than the Industry Average of 39.5%:

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
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.