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Last week saw the newest quarterly earnings release from Warner Music Group Corp. (NASDAQ:WMG), an important milestone in the company's journey to build a stronger business. It was not a great result overall. While revenues of US$1.4b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit US$0.18 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Warner Music Group
Taking into account the latest results, the most recent consensus for Warner Music Group from 17 analysts is for revenues of US$5.92b in 2022 which, if met, would be a credible 3.8% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 34% to US$0.94. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.94b and earnings per share (EPS) of US$0.97 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The average price target fell 12% to US$36.17, with reduced earnings forecasts clearly tied to a lower valuation estimate. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Warner Music Group at US$52.00 per share, while the most bearish prices it at US$16.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 7.7% growth on an annualised basis. That is in line with its 9.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although Warner Music Group is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.