Latest Ratios: P/E Ratio 8.5x · EV/EBITDA 7.7x · 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 | $13.2B | $27.2B | $17.8B | $14.3B | $13.4B | $11.5B | $32.3B | $19.7B | $20.9B | — | — |
| Enterprise Value | $12.6B | $22.6B | $10.7B | $6.8B | $9.8B | $10.3B | $26.7B | $17.5B | $3.5B | — | — |
| P/E Ratio → | 8.46 | 2.53 | 2.68 | 2.91 | 3.63 | 3.81 | 7.76 | 4.93 | 11.40 | — | — |
| P/S Ratio | 2.74 | 0.83 | 0.63 | 0.51 | 0.47 | 0.37 | 1.11 | 0.77 | 1.10 | — | — |
| P/B Ratio | 1.10 | 0.33 | 0.25 | 0.25 | 0.27 | 0.23 | 0.61 | 3.13 | 0.55 | — | — |
| P/FCF | 9.13 | 2.76 | 1.92 | 2.31 | 2.08 | 4.64 | 7.37 | 3.32 | 3.81 | — | — |
| P/OCF | 8.86 | 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 | 7.68 | 2.03 | 1.10 | 1.00 | 1.75 | 2.14 | 4.82 | 3.39 | 1.46 | — | — |
| EV / EBIT | 8.76 | 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 | 2.1% | 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 | 11.8% | 39.5% | 37.4% | 34.4% | 27.5% | 26.3% | 12.9% | 20.3% | 8.8% | — | — |
| FCF Yield | 11.0% | 36.2% | 52.0% | 43.2% | 48.0% | 21.5% | 13.6% | 30.1% | 26.3% | — | — |
| Buyback Yield | 0.7% | 2.4% | 10.8% | 8.8% | 23.4% | 30.2% | 0.4% | 0.0% | 0.0% | — | — |
| Total Shareholder Yield | 2.8% | 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 |
Regulatory and Content Licensing
Based on current market data, TME trades at a TTM P/E of 8.23, which appears to significantly undervalue the firm relative to global peers like Spotify, suggesting that investors are heavily discounting the company due to persistent regulatory risks and the maturation of its social entertainment segment.
The forward P/E of 1.38 and PEG ratio of 0.36 imply that the market is pricing in a severe contraction or a lack of future growth, which may be overly pessimistic given the company's dominant market position. This valuation gap warrants further investigation into whether the market is misinterpreting the transition from high-margin social entertainment to more stable, subscription-based music revenue.
According to recent financial statements, TME's ROIC has remained in a narrow range between 2.2% and 5.5% over the last ten quarters, indicating that while the company is profitable, it struggles to generate high returns on its massive asset base, which is heavily weighted toward goodwill.
The modest ROIC suggests that the company's historical acquisitions have not yet translated into superior compounding of invested capital. Investors should monitor whether management can improve these returns by optimizing the cost structure of its content library rather than relying on the scale of its existing user base.
As reported in quarterly filings, TME's cash conversion cycle has shifted from negative 72 days in 2023Q4 to negative 3312 days in 2025Q4, primarily driven by a massive expansion in days payable outstanding, which suggests the company exerts significant leverage over its content suppliers and partners.
This extreme negative CCC indicates that TME effectively uses its suppliers as a source of interest-free financing, a common trait of dominant platform businesses. However, this efficiency may be vulnerable if regulatory changes or shifts in industry bargaining power force a reduction in payment terms.
Based on the latest reported figures, TME maintains a current ratio of 2.22, which, combined with its negligible debt-to-equity ratio of 0.05, provides a substantial liquidity cushion that appears more than sufficient to withstand potential regulatory shocks or cyclical downturns in consumer discretionary spending.
The company's ability to maintain such high liquidity while simultaneously returning capital to shareholders suggests a conservative financial policy. This position is a key defensive attribute that distinguishes TME from more leveraged peers in the internet content sector.
The P/E ratio is frequently misapplied to TME because it fails to account for the significant shift in revenue mix from high-margin social entertainment to lower-margin, recurring music subscriptions, which fundamentally alters the company's risk profile and long-term earnings quality.
Relying solely on P/E obscures the underlying improvement in earnings predictability as the business pivots away from volatile virtual gifting. Analysts should instead focus on EV/EBITDA or FCF yield to better capture the cash-generative nature of the subscription-led model, which is currently masked by the headline earnings volatility.
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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 8.5x. 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 7.7x. 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 8.5x. 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 2.12% 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.