Earnings Miss: Warner Music Group Corp. Missed EPS By 21% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Warner Music Group Corp. (NASDAQ:WMG) released its full-year result to the market. The early response was not positive, with shares down 3.3% to US$31.85 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$6.4b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 21% to hit US$0.83 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Warner Music Group

After the latest results, the 16 analysts covering Warner Music Group are now predicting revenues of US$6.60b in 2025. If met, this would reflect a modest 2.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 53% to US$1.29. In the lead-up to this report, the analysts had been modelling revenues of US$6.68b and earnings per share (EPS) of US$1.38 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at US$35.53, 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. The most optimistic Warner Music Group analyst has a price target of US$44.00 per share, while the most pessimistic values it at US$23.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Warner Music Group shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Warner Music Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.7% growth on an annualised basis. This is compared to a historical growth rate of 8.5% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Warner Music Group.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Warner Music Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Warner Music Group going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Warner Music Group (1 can't be ignored!) that you need to be mindful of.

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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.