As of June 20, 2025, Warner Music Group Corp's estimated intrinsic value ranges from $16.83 to $37.18 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $37.18 | +41.2% |
| Discounted Cash Flow (5Y) | $31.18 | +18.4% |
| Dividend Discount Model (Multi-Stage) | $23.17 | -12.0% |
| Dividend Discount Model (Stable) | $19.57 | -25.7% |
| Earnings Power Value | $16.83 | -36.1% |
Is Warner Music Group Corp (WMG) undervalued or overvalued?
With the current market price at $26.34, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Warner Music Group Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.7 | 0.76 |
| Cost of equity | 7.1% | 9.1% |
| Cost of debt | 4.2% | 5.1% |
| Tax rate | 23.2% | 26.2% |
| Debt/Equity ratio | 0.29 | 0.29 |
| After-tax WACC | 6.2% | 7.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $31 | $19,909M | 85.6% |
| 10-Year Growth | $37 | $23,038M | 73.3% |
| 5-Year EBITDA | $30 | $19,192M | 85.0% |
| 10-Year EBITDA | $35 | $22,005M | 72.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $866M |
| Discount Rate (WACC) | 7.9% - 6.2% |
| Enterprise Value | $10,945M - $13,910M |
| Net Debt | $3,655M |
| Equity Value | $7,290M - $10,255M |
| Outstanding Shares | 521M |
| Fair Value | $14 - $20 |
| Selected Fair Value | $16.83 |
| Metric | Value |
|---|---|
| Market Capitalization | $13730M |
| Enterprise Value | $17385M |
| Trailing P/E | 30.38 |
| Forward P/E | 28.18 |
| Trailing EV/EBITDA | 14.75 |
| Current Dividend Yield | 270.93% |
| Dividend Growth Rate (5Y) | 1.21% |
| Debt-to-Equity Ratio | 0.29 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $11.16 |
| Discounted Cash Flow (5Y) | 25% | $7.80 |
| Dividend Discount Model (Multi-Stage) | 20% | $4.63 |
| Dividend Discount Model (Stable) | 15% | $2.94 |
| Earnings Power Value | 10% | $1.68 |
| Weighted Average | 100% | $28.20 |
Based on our comprehensive valuation analysis, Warner Music Group Corp's weighted average intrinsic value is $28.20, which is approximately 7.1% above the current market price of $26.34.
Key investment considerations:
Given these factors, we believe Warner Music Group Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.