Critical Review: Tencent Music Entertainment Group (TME) versus Its Peers

Tencent Music Entertainment Group (NYSE:TME) is one of 185 public companies in the “Entertainment” industry, but how does it weigh in compared to its rivals? We will compare Tencent Music Entertainment Group to related businesses based on the strength of its risk, institutional ownership, dividends, profitability, earnings, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Tencent Music Entertainment Group and its rivals, as reported by MarketBeat.com.

	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	1898	4561	9690	257	2.51

Tencent Music Entertainment Group presently has a consensus target price of $15.48, indicating a potential upside of 73.42%. As a group, “Entertainment” companies have a potential upside of 14.32%. Given Tencent Music Entertainment Group’s higher probable upside, research analysts plainly believe Tencent Music Entertainment Group is more favorable than its rivals.

Dividends

Tencent Music Entertainment Group pays an annual dividend of $0.23 per share and has a dividend yield of 2.6%. 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 15.9% and pay out 78.6% of their earnings in the form of a dividend.

Insider & Institutional Ownership

24.3% of Tencent Music Entertainment Group shares are owned by institutional investors. Comparatively, 36.0% of shares of all “Entertainment” companies are owned by institutional investors. 24.5% of shares of all “Entertainment” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Tencent Music Entertainment Group and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Tencent Music Entertainment Group	$4.71 billion	$1.54 billion	11.02
Tencent Music Entertainment Group Competitors	$4.05 billion	$67.95 million	2.73

Tencent Music Entertainment Group has higher revenue and earnings than its rivals. Tencent Music Entertainment Group is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Risk and Volatility

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

Profitability

This table compares Tencent Music Entertainment Group and its rivals’ 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	9.83%	-32.30%	-2.88%

Summary

Tencent Music Entertainment Group beats its rivals on 9 of the 15 factors compared.

About Tencent Music Entertainment Group

Tencent Music Entertainment Group operates online music and music-focused social entertainment services, primarily in China. Its platforms connect listeners, artists, and music-industry partners through streaming, music discovery, and interactive features. The company’s services include QQ Music, Kugou Music, and Kuwo Music, which offer digital music streaming and related content. Its social entertainment offerings include WeSing, a karaoke and singing platform, along with live-streaming and other interactive music experiences.