Results: Universal Music Group N.V. Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in Universal Music Group N.V. (AMS:UMG) had a good week, as its shares rose 3.4% to close at €27.61 following the release of its yearly results. Revenues were €12b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at €1.13, an impressive 33% ahead of estimates. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Universal Music Group

Taking into account the latest results, the current consensus from Universal Music Group's 15 analysts is for revenues of €12.5b in 2025. This would reflect a credible 5.9% increase on its revenue over the past 12 months. Statutory earnings per share are expected to plummet 28% to €0.83 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €12.5b and earnings per share (EPS) of €0.84 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The consensus price target held steady at €29.19, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Universal Music Group, with the most bullish analyst valuing it at €42.00 and the most bearish at €15.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Universal Music Group's past performance and to peers in the same industry. We would highlight that Universal Music Group's revenue growth is expected to slow, with the forecast 5.9% annualised growth rate until the end of 2025 being well below the historical 12% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that Universal Music Group is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at €29.19, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Universal Music Group analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Universal Music Group that you need to take into consideration.

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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.