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Warner Bros. Discovery Inc Ordinary Shares - Class A WBD

Morningstar Rating
$8.11 −0.56 (6.46%)
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Company Report

Warner Bros. Discovery Earnings: Cash Flow Continues Improving Despite Ugly Revenue Trends

Warner Bros. Discovery's fourth-quarter results were disappointing, as the Max streaming platform is yet to show any renewed momentum. Sales results in the networks and studios segments were also much worse than we anticipated, which we attribute in part to the actors and writers strikes during the second half of 2023. The top-line malaise makes it easy to write off the company's future, but we think that overlooks the cash the firm is increasingly generating and the opportunities it has to significantly improve profitability even without much sales growth. With those components in mind, we're reducing our fair value estimate from $22 to $20.

Price vs Fair Value

WBD is trading at a 59% discount.
Price
$8.11
Fair Value
$28.00
Uncertainty
Very High
1-Star Price
$27.00
5-Star Price
$14.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The entertainment content that Warner owns and can continue to create has value under any business model. Warner’s variety of distribution choices will be an asset in satisfying customers as the industry evolves further.

Bears

Without a broadcast network or football rights, Warner Bros. linear networks aren’t as critical for pay-TV distributors and will face increasing pressure as linear TV subscriptions continue to decline.

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News

Trading Information

Previous Close Price
$8.67
Day Range
$8.108.62
52-Week Range
$8.1015.85
Bid/Ask
$8.14 / $8.17
Market Cap
$19.79 Bil
Volume/Avg
52.2 Mil / 25.7 Mil

Key Statistics

Price/Earnings (Normalized)
Price/Sales
0.48
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

Warner Bros. Discovery was formed in 2022 through the combination of WarnerMedia and Discovery Communications. It operates in three global business segments: studios, networks, and direct-to-consumer. Warner Bros. Pictures is the crown jewel of the studios business, producing, distributing, and licensing movies and television shows. The networks business consists of basic cable networks, such as CNN, TNT, TBS, Discovery, HGTV, and the Food Network. Direct-to-consumer includes HBO and the firm’s streaming platforms, which have now been consolidated to Max and Discovery+. Much of the DTC content is created within the firm’s other two business segments. Each segment operates with a global reach, with Max available in over 60 countries.
Sector
Communication Services
Industry
Entertainment
Stock Style Box
Mid Value
Total Number of Employees
35,300

Competitors

Valuation

Metric
WBD
PARA
DIS
Price/Earnings (Normalized)
19.4228.42
Price/Book Value
0.440.302.07
Price/Sales
0.480.232.34
Price/Cash Flow
1.010.4216.55
Price/Earnings
WBD
PARA
DIS

Financial Strength

Metric
WBD
PARA
DIS
Quick Ratio
0.720.990.69
Current Ratio
0.931.320.84
Interest Coverage
−0.82−0.513.37
Quick Ratio
WBD
PARA
DIS

Profitability

Metric
WBD
PARA
DIS
Return on Assets (Normalized)
−1.76%0.72%4.22%
Return on Equity (Normalized)
−4.92%1.80%8.71%
Return on Invested Capital (Normalized)
−0.66%2.42%5.86%
Return on Assets
WBD
PARA
DIS
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