Yahoo Finance Despite delivering investors losses of 17% over the past 1 year, Warner Music Group (NASDAQ:WMG) has been growing its earnings
Warner Music Group Corp. (NASDAQ:WMG) shareholders will doubtless be very grateful to see the share price up 50% in the last quarter. The stock is actually down over the last year. But on the bright side, its return of 17%, is better than the market, which is down 0.21630476611122.
Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.
Check out our latest analysis for Warner Music Group
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Even though the Warner Music Group share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.
It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's well worth checking out some other metrics, too.
With a low yield of 1.8% we doubt that the dividend influences the share price much. Warner Music Group managed to grow revenue over the last year, which is usually a real positive. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Warner Music Group is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
While they no doubt would have preferred make a profit, at least Warner Music Group shareholders didn't do too badly in the last year. Their loss of 17%, including dividends, actually beat the broader market, which lost around 22%. At least the recent returns have been positive, with the stock up 50% in around 90 days. It could be that the share price dropped so far that the business was cheap on the numbers, but the future will ultimately determine the value of the stock. It's always interesting to track share price performance over the longer term. But to understand Warner Music Group better, we need to consider many other factors. Even so, be aware that Warner Music Group is showing 3 warning signs in our investment analysis , and 1 of those is potentially serious...
Of course Warner Music Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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