Latest Ratios: P/E Ratio 8.1x · EV/EBITDA 7.3x · ROE 14.5%. (2016–2025 historical series)
Price-based multiples — how expensive the stock is relative to earnings, sales, book value, and cash flow
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Market Cap | $12.8B | $27.2B | $17.8B | $14.3B | $13.4B | $11.5B | $32.3B | $19.7B | $20.9B | — | — |
| Enterprise Value | $12.1B | $22.6B | $10.7B | $6.8B | $9.8B | $10.3B | $26.7B | $17.5B | $3.5B | — | — |
| P/E Ratio → | 8.10 | 2.53 | 2.68 | 2.91 | 3.63 | 3.81 | 7.76 | 4.93 | 11.40 | — | — |
| P/S Ratio | 2.62 | 0.83 | 0.63 | 0.51 | 0.47 | 0.37 | 1.11 | 0.77 | 1.10 | — | — |
| P/B Ratio | 1.05 | 0.33 | 0.25 | 0.25 | 0.27 | 0.23 | 0.61 | 3.13 | 0.55 | — | — |
| P/FCF | 8.73 | 2.76 | 1.92 | 2.31 | 2.08 | 4.64 | 7.37 | 3.32 | 3.81 | — | — |
| P/OCF | 8.48 | 2.68 | 1.73 | 1.95 | 1.79 | 2.20 | 6.62 | 3.17 | 3.71 | — | — |
P/E links to full P/E history page with 30-year chart
Enterprise-value multiples — capital-structure-neutral measures of total business value
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| EV / Revenue | — | 0.69 | 0.38 | 0.24 | 0.35 | 0.33 | 0.92 | 0.69 | 0.19 | — | — |
| EV / EBITDA | 7.33 | 2.03 | 1.10 | 1.00 | 1.75 | 2.14 | 4.82 | 3.39 | 1.46 | — | — |
| EV / EBIT | 8.36 | 1.68 | 1.21 | 1.35 | 2.18 | 2.74 | 5.64 | 4.27 | 1.73 | — | — |
| EV / FCF | — | 2.29 | 1.15 | 1.09 | 1.52 | 4.15 | 6.09 | 2.95 | 0.64 | — | — |
Margins and return-on-capital ratios measuring operating efficiency
Full margin charts and quarterly trend are on the Earnings History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross Margin | 44.2% | 44.2% | 42.3% | 35.3% | 31.0% | 30.1% | 31.9% | 34.1% | 38.3% | 34.7% | 28.3% |
| Operating Margin | 29.6% | 29.6% | 30.7% | 21.8% | 15.7% | 12.2% | 16.2% | 18.2% | 10.7% | 14.5% | 2.4% |
| Net Profit Margin | 33.6% | 33.6% | 23.4% | 17.7% | 13.0% | 9.7% | 14.3% | 15.7% | 9.7% | 12.1% | 1.9% |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROE | 14.5% | 14.5% | 10.5% | 9.3% | 7.3% | 5.8% | 14.1% | 18.1% | 5.7% | 5.7% | 0.4% |
| ROA | 11.5% | 11.5% | 8.0% | 6.9% | 5.5% | 4.5% | 11.0% | 15.3% | 4.9% | 5.0% | 0.3% |
| ROIC | 10.4% | 10.4% | 11.6% | 9.5% | 7.0% | 5.9% | 13.8% | 28.3% | 7.4% | 6.2% | 0.4% |
| ROCE | 12.0% | 12.0% | 12.7% | 10.2% | 7.9% | 6.6% | 14.5% | 20.7% | 6.3% | 6.7% | 0.5% |
Solvency and debt-coverage ratios — lower is generally safer
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt / Equity | 0.05 | 0.05 | 0.09 | 0.11 | 0.12 | 0.10 | 0.10 | 0.00 | — | — | — |
| Debt / EBITDA | 0.34 | 0.34 | 0.62 | 0.89 | 1.06 | 1.12 | 0.99 | 0.00 | — | — | — |
| Net Debt / Equity | — | -0.06 | -0.10 | -0.13 | -0.07 | -0.02 | -0.11 | -0.35 | -0.46 | -0.20 | -0.15 |
| Net Debt / EBITDA | -0.42 | -0.42 | -0.73 | -1.11 | -0.64 | -0.26 | -1.02 | -0.43 | -7.21 | -2.62 | -9.06 |
| Debt / FCF | — | -0.47 | -0.77 | -1.22 | -0.56 | -0.50 | -1.28 | -0.37 | -3.16 | -2.14 | -3.69 |
| Interest Coverage | 109.83 | 109.83 | 71.26 | 40.31 | 39.03 | 31.01 | 48.77 | 63.86 | 58.23 | — | — |
Net cash position: cash ($8.5B) exceeds total debt ($3.8B)
Short-term solvency ratios and asset-utilisation metrics
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Current Ratio | 2.22 | 2.22 | 2.09 | 2.49 | 2.27 | 2.56 | 3.30 | 3.16 | 3.33 | 2.12 | 1.98 |
| Quick Ratio | 2.22 | 2.22 | 2.09 | 2.49 | 2.27 | 2.56 | 3.30 | 3.16 | 3.33 | 2.11 | 1.98 |
| Cash Ratio | 1.67 | 1.67 | 1.64 | 1.96 | 1.78 | 1.95 | 2.71 | 2.63 | 2.80 | 1.47 | 1.32 |
| Asset Turnover | — | 0.32 | 0.31 | 0.37 | 0.42 | 0.46 | 0.43 | 3.36 | 0.43 | 0.37 | 0.19 |
| Inventory Turnover | 447.69 | 447.69 | 712.00 | 2244.63 | 1397.57 | 910.00 | 1102.83 | 4490.47 | 334.51 | 239.03 | 223.50 |
| Days Sales Outstanding | — | 43.33 | 45.08 | 38.38 | 37.65 | 44.36 | 37.41 | 4.95 | 28.51 | 43.28 | 67.71 |
Earnings, FCF, buyback, and dividend yields — total returns to shareholders
Full dividend history and growth charts are on the Dividend History page
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dividend Yield | 2.2% | 7.1% | 8.5% | — | — | — | — | 0.2% | 0.1% | — | — |
| Payout Ratio | 17.4% | 17.4% | 22.7% | — | — | — | — | 0.8% | 1.0% | — | — |
| Metric | TTM | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings Yield | 12.4% | 39.5% | 37.4% | 34.4% | 27.5% | 26.3% | 12.9% | 20.3% | 8.8% | — | — |
| FCF Yield | 11.5% | 36.2% | 52.0% | 43.2% | 48.0% | 21.5% | 13.6% | 30.1% | 26.3% | — | — |
| Buyback Yield | 0.8% | 2.4% | 10.8% | 8.8% | 23.4% | 30.2% | 0.4% | 0.0% | 0.0% | — | — |
| Total Shareholder Yield | 3.0% | 9.5% | 19.3% | 8.8% | 23.4% | 30.2% | 0.4% | 0.2% | 0.1% | — | — |
| Shares Outstanding | — | $1.6B | $1.6B | $1.6B | $1.6B | $1.7B | $1.7B | $1.7B | $1.6B | $1.6B | $1.6B |
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Quick answers to the most common questions about buying TME stock.
Tencent Music Entertainment Group's current P/E ratio is 8.1x. The historical average is 5.0x. This places it at the 88th percentile of its historical range.
Tencent Music Entertainment Group's current EV/EBITDA is 7.3x. This enterprise value multiple compares the company's total value (equity + debt - cash) to its EBITDA. The historical average is 2.2x.
Tencent Music Entertainment Group's return on equity (ROE) is 14.5%. The historical average is 9.1%.
Based on historical data, Tencent Music Entertainment Group is trading at a P/E of 8.1x. This is at the 88th percentile of its historical P/E range. Compare with industry peers and growth rates for a complete picture.
Tencent Music Entertainment Group's current dividend yield is 2.21% with a payout ratio of 17.4%.
Tencent Music Entertainment Group has 44.2% gross margin and 29.6% operating margin. Operating margin above 20% indicates strong pricing power and cost efficiency.
Tencent Music Entertainment Group's Debt/EBITDA ratio is 0.3x, indicating low leverage. A ratio below 2x is generally considered financially healthy.
Key Metrics
Top Statement Risk
Social Entertainment Segment Decline
Valuation Reflects Deep Discount to Earnings Power
Tencent Music trades at a forward P/E of 1.45 and an EV/EBITDA of 0.97, a profound discount to its own historical multiples and global peers like Spotify, suggesting the market is pricing in severe structural headwinds to its earnings trajectory.
The current forward P/E of 1.45 is exceptionally low for a company with a 27.7% net margin and accelerating revenue growth, indicating the market is either skeptical of the sustainability of these margins or applying a significant China-specific risk discount. Compared to Spotify's forward P/E of 44.71, TME's valuation appears to treat its subscription business as a low-growth utility rather than a platform with network effects. This disconnect warrants investigation into whether the market is over-penalizing TME for the decline in its Social Entertainment segment while underappreciating the quality of its growing Online Music subscription base.
Margin Expansion Driven by Strategic Mix Shift
Gross margins have expanded from 40.9% in 2024Q1 to 44.2% in 2026Q2, a trend that appears to be driven by the strategic pivot toward higher-margin Online Music subscriptions and improved content cost efficiency, as reported in the company's financial statements.
The consistent improvement in gross margin suggests TME is successfully negotiating more favorable terms with content providers or shifting its revenue mix toward less royalty-intensive streams. The operating margin of 34.0% in 2026Q2, up from 28.9% in 2024Q1, indicates that this gross margin expansion is flowing through to the bottom line, supported by disciplined SG&A control. However, the sustainability of this trend depends on whether the expiration of exclusive licensing agreements leads to a permanent reduction in content costs or if competition for premium audio content will eventually force margins back down.
Capital Efficiency Improving on Low Leverage
Return on Invested Capital (ROIC) has improved from 2.8% in 2024Q1 to 3.3% in 2026Q2, a modest but positive trend that, when combined with a negligible debt-to-equity ratio of 0.21, suggests the company is generating incremental returns without relying on financial leverage.
The ROIC trend, while positive, remains low in absolute terms, which is partly a function of the company's massive cash and intangible asset base inflating the invested capital denominator. The more telling metric is the spread between ROIC and the company's cost of capital, which appears positive given the fortress balance sheet and robust cash generation. The key driver of future ROIC improvement will be the continued shift toward the subscription model, which should generate higher returns on the content assets TME licenses.
Working Capital Driven by Content Payment Terms
Tencent Music's negative cash conversion cycle, averaging around -90 days, is primarily driven by a very long Days Payable Outstanding (DPO) of over 120 days, indicating the company holds cash for extended periods before paying content providers, a significant source of operational float.
The negative CCC is a structural feature of the business model, not a sign of operational inefficiency. The long DPO suggests TME has substantial bargaining power with its content suppliers, allowing it to use their capital to fund its operations. The relatively low Days Sales Outstanding (DSO) of around 40 days indicates efficient collection from its own customers, particularly in the subscription segment. Investors should monitor if any changes in content licensing terms could compress this favorable DPO, which would directly impact working capital and cash flow.
Negligible Leverage Provides Strategic Optionality
With a debt-to-equity ratio of just 0.21 and interest coverage that is effectively infinite in most quarters, Tencent Music's balance sheet is exceptionally conservative, providing a substantial buffer against regulatory or operational shocks and ample capacity for strategic investments.
The minimal use of debt is a deliberate strategic choice, not a reflection of an inability to access capital markets. This conservative posture is particularly prudent given the regulatory uncertainty surrounding the Social Entertainment segment. The fortress balance sheet allows management to weather potential downturns in discretionary spending without financial distress and provides the flexibility to pursue share repurchases or strategic acquisitions, as evidenced by the $3.6 billion returned to shareholders in 2024Q4.
The Misapplied Metric: Price-to-Sales
The Price-to-Sales (P/S) ratio of 2.69 is the most commonly misapplied metric for TME, as it obscures the dramatic difference in profitability and growth between its Online Music and Social Entertainment segments, which have vastly different margin profiles.
Using a blended P/S ratio treats all revenue as equal, which is misleading for a company undergoing a structural mix shift. The Online Music segment, with its recurring subscriptions and improving margins, likely warrants a significantly higher multiple than the declining, lower-margin Social Entertainment segment. A more appropriate analysis would involve a sum-of-the-parts valuation, assigning a higher multiple to the subscription business and a lower, perhaps declining, multiple to the social entertainment cash flows. The current blended P/S may make the stock appear cheaper than it is on a segment-adjusted basis.