SM Entertainment is a K-pop agency that discovers and develops artists such as TVXQ, Girls' Generation, EXO, aespa and RIIZE and earns money from records and music, concerts and merchandise (MD), so comebacks from popular acts and debuts of new groups drive its results. Revenue has grown for five straight years, 2025 operating profit was an all-time high, and with an ROE of 34.6%, a net cash position and a 2.1% dividend it is among the financially strongest of the K-pop agencies; the most notable event is that, marking its 30th anniversary, it has flagged the debut of a new boy group in 2026. What stands out lately is that if the new debut is a hit and touring and merchandise from existing artists expand, the undervaluation case at an EV/EBIT in the low-8x range gains support, whereas if the new group is slow to perform or activity gaps overlap, quarterly variance can widen.
At-a-glance assessment financial health · growth · profitability · valuation
- Debt is somewhat higher than equity (debt ratio 200.2%).
- Revenue rose 18.7% year over year, and the pace is quickening (3-year trend: rising).
- Most recent quarter (Q1 2026) revenue was 20.6% higher than a year earlier.
- ROE is 34.6% (controlling-interest basis). It is above the sector average.
- Operating margin is 15.6%.
Ownership & governance As of 2025-12-31
Largest shareholder Kakao 21.61% (corporate)
Controlling bloc incl. related parties 41.83%
With the controlling bloc holding 42%, the ownership structure is stable.
🔎 In-depth analysis
- SM Entertainment is a K-pop agency that discovers and develops artists and earns money from records and music, concerts and merchandise (MD).
- Its flagship artists include TVXQ, Super Junior, Girls' Generation, SHINee, EXO, Red Velvet, NCT, aespa and RIIZE.
- Revenue breaks down mainly into record and music sales, domestic and overseas performances, merchandise, and advertising and broadcast production.
- The fan-communication platform Dear U and subsidiaries tied to video and merchandise are also captured in the results.
- Because a single star generates revenue from albums, tours and merchandise at the same time, comebacks from popular artists and debuts of new groups drive the results.
- The latest close is ₩74,600 and the market cap is ₩1.7 trillion.
- The price sits below its 20-day line (₩76,090) and its 60-day line (₩83,825).
- Trading under both its short- and mid-term moving averages, the trend is on the soft side.
- RSI (a supplementary gauge that weighs up-days against down-days over the past 14 days on a 0-100 scale) is 46.5, a neutral level.
- The one-month change is +1.8%, the three-month change is -10.1%, and the price is -51.2% from its 52-week high.
- Relative strength versus the KOSDAQ is 55 (1-99, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market).
- That places it in roughly the top 45% of all stocks by strength.
- Over the past three months it led the index by 17.7%.
- It is best to read the chart alongside trading volume and the dates on which disclosures were made.
- One trap has to be flagged before reading the valuation metrics.
- The reported P/E ratio (how many times one year's net profit the price represents) of 4.92x looks very cheap.
- But that number reflects 2025 net profit inflated substantially by a one-off gain outside the core business.
- 2025 operating profit was ₩183.0 billion, yet net profit was ₩347.2 billion, far larger than what the operations earned.
- In other words, a non-operating special gain pushed net profit up.
- So a P/E of 5.2x using last year's earnings as is makes the company look excessively cheap relative to reality.
- The company's real strength instead shows in operating profit and return on equity (ROE, how much is earned in a year on equity).
- ROE of 34.6% is the highest among peer agencies, and the operating margin is 15.6%.
- The balance sheet is in a net cash position, with net debt (gross borrowings less cash; negative means net cash) of -₩266.6 billion, meaning it holds more cash than debt.
- EV/EBIT (enterprise value divided by operating profit, akin to a P/E that includes debt) is 8.4x, on the low side.
- FCF yield, the ratio of cash actually earned against market cap, is 8.5%, so cash generation is sound too.
- The dividend yield is 2.1%.
- For reference, the reported debt ratio of 200% includes operating liabilities such as advance receipts on concerts and merchandise, so it differs from the actual interest-bearing borrowing burden.
- The top line keeps growing.
- Revenue rose from ₩701.6 billion in 2021 to ₩1,174.9 billion in 2025, up every year for five years; 2025 revenue grew 18.7% year on year.
- Operating profit more than doubled from ₩87.3 billion in 2024 to ₩183.0 billion in 2025, an all-time high, the result of a cluster of artist comebacks and a structural rise in merchandise revenue.
- In Q1 2026 revenue rose 20.6% and operating profit 18.5%, extending the growth.
- Q1 net profit fell sharply from a year earlier because a one-off gain in the same quarter last year disappeared; the core business itself is firm.
- The outlook is not bad either.
- In 2026 a new boy group, the first in three years since RIIZE, is preparing to debut, adding to activity from major artists and growth at subsidiaries such as Dear U.
- On normalized 2026 net profit stripped of the one-off gain, the share price is about 12x net profit, higher than the impression given by last year's 5x P/E but still not a demanding multiple.
- Most recent disclosures are routine results and stake changes.
- On May 6, 2026, the company announced preliminary Q1 2026 results via fair disclosure and held an investor briefing (IR) the same day.
- On April 23 it pre-announced the disclosure of settled results.
- Several large-holding reports across April and May indicate that major shareholders' stakes changed.
- The regular general meeting was completed on March 25.
- On the business side, the most notable event is that, marking its 30th anniversary, the company presented a new growth vision and flagged the debut of a new boy group in 2026.
- The points to watch are clear.
- The core business keeps growing.
- Revenue has risen for five straight years and 2025 operating profit was an all-time high.
- With ROE of 34.6%, a net cash position and a 2.1% dividend, it is among the financially strongest of the peer agencies.
- In reading the valuation, though, one must strip out the one-off gain embedded in last year's net profit.
- Seen that way, the shares are about 12x normalized earnings, similar to peer JYP.
- The strong case is when the new boy group's debut is a hit and touring and merchandise from existing artists expand; in that case operating-profit growth continues and the undervaluation case at an EV/EBIT in the low-8x range gains support.
- The weak case is when the new group is slow to perform or gaps in a particular artist's activity overlap.
- K-pop agency results vary widely by quarter depending on album and tour schedules.
- Ultimately, the hit rate of the new debut and the activity density of major artists decide the direction of this stock.
🔎 Valuation vs peers Fairly valued
Large listed domestic K-pop agencies (with similar business structures across records, performances, merchandise and fan platforms) are used as the peer set.
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| JYP Entertainment | 10.94x | 2.83x | 25.87% |
| YG Entertainment | 20.79x | 1.49x | 7.19% |
| HYBE | — | 3.04x | -7.29% |
The reported P/E of 5.2x looks extremely cheap on its own, but that is an illusion caused by 2025 net profit being inflated by a non-operating one-off gain. On normalized earnings with the one-off stripped out, the share price is about 12x net profit, similar to peer JYP (12.3x) and below YG (22.2x). So on P/E alone it is a fairly valued level. That said, EV/EBIT, enterprise value divided by operating profit, is a low 8.4x, and qualitative metrics such as ROE, dividend and net cash are best in class among peers. With a normalized multiple that accounts for the earnings inflection sitting in the middle of the peer group while financial quality is the strongest, we view it as a fairly valued range, neither excessively cheap nor expensive.
Price history Close · MA20 · MA60
The latest close is ₩74,600 and the market capitalization is ₩1.7 trillion. The price sits below its 20-day moving average (₩76,090) and below its 60-day moving average (₩83,825). It is under both its short- and medium-term moving averages, so the trend looks subdued. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 46.5, a neutral level. The one-month change is +1.8%, the three-month change is -10.1%, and the position relative to the 52-week high is -51.2%. Relative strength versus the KOSDAQ is 55 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 55% of all stocks. Over the past three months it outpaced the index by 17.7%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M +17.70% / 6M -23.30% / 12M -45.07%
Key metrics vs sector median
Valuation
The P/E of 4.92x is below the sector median (26.72x). The P/B of 1.70x is in line with the sector median (1.93x).
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate)
DCF (discounted cash flow) estimate — discount rate 10.1%, initial growth 2.0%→terminal 2.0%, 10-yr forecast, free-cash-flow basis, forward earnings power normalized 0.6x. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is 34.6%, above the sector average (6.0%). The operating margin is 15.6%. The debt ratio is 200.2%, so the financial structure is somewhat high.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $637.0M | $656.0M | $778.7M | +18.71% ↑ faster |
| Operating profit | $75.2M | $57.9M | $121.3M | +109.67% ↑ faster |
| Net profit | $57.9M | $12.1M | $230.1M | +1796.29% ↑ faster |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $465.0M | $563.9M | $637.0M | $656.0M | $778.7M |
| Operating profit | $44.8M | $60.3M | $75.2M | $57.9M | $121.3M |
| Net profit | $88.5M | $53.0M | $57.9M | $12.1M | $230.1M |
| Revenue CAGR | 4-yr avg 13.76% | ||||
Revenue rose 18.7% year over year (2023 ₩961.1 billion → 2024 ₩989.7 billion → 2025 ₩1.2 trillion), and the three-year trend is 'rising'. The pace of growth also quickened from the prior year. Operating profit rose 109.7% year over year. Profit is growing at an accelerating pace. Over the 5 years on record, revenue compound annual growth (CAGR) is 13.8%. The two-year revenue CAGR is 10.6%. In the most recent quarter (Q1 2026), revenue was 20.6% higher than the same period a year earlier.
Latest quarterly results Q1 2026 · vs year-ago
Technical indicators
What stands out
- ROE of 34.6% points to solid profitability.
- Revenue grew 18.7% year over year, a sign of growth.
- The balance sheet is stable in terms of debt and liquidity.
Points to watch
- The figures shown are based on the last annual report as of the writing date, so it is best to review the latest quarterly results and filings alongside them.
Recent news & events searched · sourced
- 2026-05-06EarningsFair disclosure of preliminary consolidated Q1 2026 results — revenue ₩279.1 billion and operating profit ₩38.6 billion, each up double digits year on yearConfirms the core business keeps growing. The drop in net profit reflects the disappearance of a one-off gain from the year-earlier quarter and is unrelated to operating strength (medium-term positive). Source
- 2026-05-06IRInvestor briefing (IR) held — explaining Q1 results and the 2026 business directionShares the business plan with investors. An opportunity to confirm the direction of new debuts and subsidiary growth (neutral to positive). Source
- 2026-04-23FilingPre-announcement of settled-results disclosure — advance notice of the regular results release scheduleA short-term event on standby following the pre-announcement of the results schedule (neutral). Source
- 2026-05-04UpdateSubmission of a large-holding status report (abbreviated form) — a change in a major shareholder's stakeA signal of a change in the ownership structure. A supply/demand factor to watch (neutral). Source
Figure cross-check computed ↔ external
Recent filings
- 2026-05-29Large-business-group status disclosure
- 2026-05-15PeriodicQuarterly report
- 2026-05-06EarningsFair-disclosure notice
- 2026-05-06EarningsFair-disclosure notice
- 2026-05-06Disclosure
- 2026-05-04OwnershipOwnership-change filing
- 2026-04-23EarningsEarnings disclosure
- 2026-04-21OwnershipAmended filing
- 2026-04-20OwnershipOwnership-change filing
- 2026-04-06OwnershipOwnership-change filing
- 2026-03-25Disclosure
- 2026-03-25Shareholders' meeting notice
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.