Tencent Music Entertainment Group (TCMEF) stock analysis
Close on Oct 19, 2026Market cap $7.38BP/E –Yield –
StockData Score
Prices as of Nov 3, 2026How the score works
Mixed12 of 30 checks passed
Tencent Music Entertainment passes 12 of the 30 checks behind our score; 15 could not be run for lack of data and count as not passed. Each dot in the shape is one check — hover it for the numbers.
- Valuation
- 0/6
- Growth
- 3/6
- Past performance
- 5/6
- Financial health
- 4/6
- Dividend
- 0/6
What stands out
Return on capital over 10%
Return on invested capital was 18.7%, above the 10% that usually covers the cost of capital.
Low debt
Debt is 16.8% of shareholders' equity, under the 40% we consider low.
Earnings grew over 5 years
Net income grew 21.6% a year on average over the last five fiscal years.
Earnings growth accelerating
Net income grew 66.4% over the last twelve months, against a 5-year average of 21.6% a year.
What to watch
Return on equity under 15%
Return on equity was 15.1% over the last twelve months and averaged 9.7% over five years; we look for 15% on both.
Revenue growing under 10% a year
Revenue grew 5.1% a year over the last three fiscal years, short of the 10% we look for.
No dividend
Tencent Music Entertainment has not paid a dividend in the last twelve months.
Valuation0/6
P/E against its history
Not enough price and earnings history to compare.
P/E against the industry
Needs positive earnings and enough profitable companies in the industry.
EV/EBITDA against its history
Needs positive EBITDA and price history.
P/B against the industry
Needs positive book value.
Price against fair value
We could not estimate a fair value: it needs at least two valuation methods with positive inputs.
Margin of safety
Depends on the fair value estimate.
Growth3/6
Revenue growing under 10% a year
Revenue grew 5.1% a year over the last three fiscal years, short of the 10% we look for.
EPS growth over 3 years
Needs positive EPS three years ago and today.
Earnings growth accelerating
Net income grew 66.4% over the last twelve months, against a 5-year average of 21.6% a year.
Growing faster than the industry
Revenue grew 15.8% over the last twelve months; the Communications median is 0.5%.
Company guidance
No outlook found in earnings releases from the last twelve months.
Gross margin improving
Gross margin was 44.2% over the last twelve months, against 42.3% a year earlier.
Past performance5/6
Return on equity under 15%
Return on equity was 15.1% over the last twelve months and averaged 9.7% over five years; we look for 15% on both.
Return on capital over 10%
Return on invested capital was 18.7%, above the 10% that usually covers the cost of capital.
Return on equity above the industry
Tencent Music Entertainment's return on equity of 15.1% is above the Communications median of 2.2%.
Earnings grew over 5 years
Net income grew 21.6% a year on average over the last five fiscal years.
Net margin above its 5-year average
Net margin was 33.6% over the last twelve months, against a 5-year average of 19.5%.
Net margin above the industry
Tencent Music Entertainment's net margin of 33.6% is above the Communications median of -5.2%.
Financial health4/6
Low debt
Debt is 16.8% of shareholders' equity, under the 40% we consider low.
Debt trend
Needs a balance sheet from five years ago with positive equity.
Debt covered by cash flow
Operating cash flow over the last twelve months equals 77.9% of total debt.
Interest well covered
Operating income covers interest expense 103.6 times.
Short-term assets cover short-term debts
Current assets are 1.74 times current liabilities.
Bankruptcy risk (Altman Z)
Needs market value, working capital and retained earnings.
Dividend0/6
No dividend
Tencent Music Entertainment has not paid a dividend in the last twelve months.
Yield against Treasuries
No dividend.
Yield against the market
No dividend.
Dividend stability
No dividend.
Earnings cover
No dividend.
Cash-flow cover
No dividend.
Fair value
How we estimate itWe don't publish a fair value for Tencent Music Entertainment. It needs a US-dollar share price, at least two valuation methods with positive inputs (earnings, EBITDA, book value or sales) and, for companies with several share classes, classes that trade at the same price.
An estimate from reported numbers and market multiples, not a price target or investment advice. It can be far off for companies whose profits are about to change sharply.
Market risk
From the past year of daily prices.
Liquidity
Low risk
- Average value traded per day
- $48.11M
- Value traded per 1% price move
- $40.69M
Downside
High risk
- Typical loss in a bad month
- 34.7%
- Volatility (annualized)
- 47%
- Sharpe ratio, 1 year
- -1.36
- Beta to the S&P 500 (5Y)
- 1.05
Typical bad-month loss, week by week
Margins
Share of revenue, fiscal years 2016 to 2025
Gross margin
Operating margin
Net margin
Growth rates
Compound annual growth to fiscal 2025
| Per year | 1 year | 3 years | 5 years | 10 years | Five-year pace |
|---|---|---|---|---|---|
| Revenue | +15.8% | +5.1% | +2.4% | – | |
| Gross profit | +20.9% | +18.3% | +9.3% | – | |
| Operating income | +53.4% | +44.4% | +23.2% | – | |
| Net income | +66.4% | +44.3% | +21.6% | – | |
| Free cash flow | -0.3% | +10.3% | +15.8% | – |
Returns and balance sheet
10 fiscal years. Hover a measure to see how it is calculated.
| Measure | FY2016 | FY2020 | FY2025 | Trend |
|---|---|---|---|---|
| Return on equity | – | 8.7% | 14.9% | |
| Return on assets | – | 6.9% | 11.5% | |
| Current ratio | – | 3.30 | 2.22 | |
| Interest coverage | – | 48.6× | 103.6× | |
| Inventory turnover | – | 902.3× | 574.0× | |
| Capex to revenue | 0.9% | 0.4% | 0.9% | |
| Diluted shares | 1.90B | 3.36B | 3.11B |
Where the cash went
Fiscal 2021 to 2025, five years combined
Tencent Music Entertainment generated CN¥40.56B from operations and spent CN¥14.69B on capital expenditure, dividends and share buybacks. 7% of that went back into the business.
DuPont analysis
Return on equity split into margin, efficiency and leverage
| Fiscal year | Net margin | Asset turnover | Equity multiplier | Return on equity |
|---|---|---|---|---|
| FY2025 | 33.6% | 0.34× | 1.30× | 14.9% |
| FY2024 | 23.4% | 0.34× | 1.34× | 10.7% |
| FY2023 | 17.7% | 0.39× | 1.37× | 9.5% |
| FY2022 | 13.0% | 0.42× | 1.36× | 7.5% |
| FY2021 | 9.7% | 0.46× | 1.32× | 5.9% |
| FY2020 | 14.3% | 0.48× | 1.26× | 8.7% |
| FY2019 | 15.7% | 0.52× | 1.20× | 9.8% |
| FY2018 | 9.7% | 0.51× | 1.17× | 5.7% |
Piotroski F-Score
Nine tests of profitability, balance sheet and efficiency, fiscal 2025 against fiscal 2024
- ProfitableNet income above zeroCN¥11.06B
- Cash generatingOperating cash flow above zeroCN¥10.23B
- Return on assets improvedROA up on the prior year8.8% → 12.2%
- Earnings backed by cashOperating cash flow above net incomeCN¥10.23B vs CN¥11.06B
- Less leverageLong-term debt to assets fell– → 0.0%
- Better liquidityCurrent ratio rose2.09 → 2.22
- No dilutionShare count did not rise3.13B → 3.11B
- Gross margin improvedGross margin up on the prior year42.34% → 44.18%
- More efficientAsset turnover rose0.38 → 0.36
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