Critical Analysis: Tencent Music Entertainment Group (TME) & Its Competitors

Tencent Music Entertainment Group (NYSE:TME) is one of 184 public companies in the “Entertainment” industry, but how does it contrast to its competitors? We will compare Tencent Music Entertainment Group to related businesses based on the strength of its earnings, valuation, analyst recommendations, institutional ownership, profitability, dividends and risk.

Profitability

This table compares Tencent Music Entertainment Group and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tencent Music Entertainment Group	26.27%	11.53%	8.87%
Tencent Music Entertainment Group Competitors	11.06%	-25.84%	-2.42%

Valuation and Earnings

This table compares Tencent Music Entertainment Group and its competitors gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Tencent Music Entertainment Group	$4.71 billion	$1.54 billion	11.76
Tencent Music Entertainment Group Competitors	$6.02 billion	$73.17 million	14.17

Tencent Music Entertainment Group’s competitors have higher revenue, but lower earnings than Tencent Music Entertainment Group. Tencent Music Entertainment Group is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Dividends

Tencent Music Entertainment Group pays an annual dividend of $0.23 per share and has a dividend yield of 2.4%. Tencent Music Entertainment Group pays out 28.4% of its earnings in the form of a dividend. As a group, “Entertainment” companies pay a dividend yield of 16.4% and pay out 79.5% of their earnings in the form of a dividend.

Institutional and Insider Ownership

24.3% of Tencent Music Entertainment Group shares are owned by institutional investors. Comparatively, 36.3% of shares of all “Entertainment” companies are owned by institutional investors. 23.9% of shares of all “Entertainment” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Tencent Music Entertainment Group has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, Tencent Music Entertainment Group’s competitors have a beta of 1.00, suggesting that their average stock price is 0% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Tencent Music Entertainment Group and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tencent Music Entertainment Group	0	8	3	1	2.42
Tencent Music Entertainment Group Competitors	1876	4510	9623	255	2.51

Tencent Music Entertainment Group presently has a consensus target price of $16.43, suggesting a potential upside of 72.42%. As a group, “Entertainment” companies have a potential upside of 18.46%. Given Tencent Music Entertainment Group’s higher probable upside, equities analysts clearly believe Tencent Music Entertainment Group is more favorable than its competitors.

Summary

Tencent Music Entertainment Group competitors beat Tencent Music Entertainment Group on 8 of the 15 factors compared.

Tencent Music Entertainment Group Company Profile

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. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.