It's been a great afternoon session for Tencent Music Entertainment investors, who saw their shares rise 6.8% to a price of $12.19 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Tencent Music Entertainment Has Attractive Multiples and Trading Near 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 22.6 and an average price to book (P/B) ratio of 3.19. In contrast, Tencent Music Entertainment has a trailing 12 month P/E ratio of 24.9 and a P/B ratio of 0.3.
Tencent Music Entertainment has moved 37.6% over the last year compared to 32.0% for the S&P 500 — a difference of 5.6%. Tencent Music Entertainment has a 52 week high of $15.77 and a 52 week low of $7.92.
An Excellent Current Ratio but Similar Gross Margins to the Industry Average of 38.0%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $18,985 | $25,434 | $29,153 | $31,244 | $28,339 | $27,752 |
| Gross Margins | 38% | 34% | 32% | 30% | 31% | 35% |
| Net Margins | 10% | 16% | 14% | 10% | 14% | 19% |
| Net Income (M) | $1,832 | $3,977 | $4,176 | $3,215 | $3,839 | $5,220 |
| Net Interest Expense (M) | $35 | $64 | $97 | $121 | $108 | $141 |
| Diluted Shares (M) | 6,532 | 6,710 | 6,770 | 6,780 | 6,864 | 6,864 |
| Earnings Per Share | $0.28 | $0.59 | $0.62 | $0.47 | $0.56 | $0.76 |
| Free Cash Flow (M) | $5,632 | $6,200 | $4,885 | $5,239 | $7,481 | $7,337 |
| Current Ratio | 3.33 | 3.17 | 3.3 | 2.56 | 2.27 | 2.49 |
