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Warner Bros (WBD)
NASDAQ:WBD
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Warner Bros
(NASDAQ:WBD)
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Rating:62Neutral
Price Target:
$30.00
▲(10.54% Upside)
Action:ReiteratedDate:02/28/26
The score is driven primarily by improved profitability and sustained positive free cash flow, supported by generally constructive technical momentum and upbeat streaming/theatrical commentary from the earnings call. These positives are materially tempered by a very high P/E valuation and continued revenue softness with multi-year volatility in operating performance.
Positive Factors
Franchise & box‑office strength
Consistent theatrical outperformance signals durable IP and franchise health. Reliable high‑grossing releases bolster downstream licensing, merchandising, and streaming window economics, strengthening long‑term monetization and reducing reliance on any single distribution channel.
Streaming scale with monetization levers
Growing subscriber scale and explicit monetization levers (price increases, ad tiers, password‑sharing enforcement, international launches) create structural upside to ARPU and ad revenue. Scale supports content investment efficiency and long‑term margin expansion if retention trends persist.
Positive free cash flow and profitability rebound
Sustained positive FCF and a return to net income provide durable financial flexibility for content investment, deleveraging, or strategic actions. Even with year‑over‑year variability, multi‑year positive cash generation supports operational resilience and optionality over the next 2–6 months.
Negative Factors
Revenue softness and secular headwinds
A multi‑year softening in top line and secular pressure on linear businesses undermine long‑term margin sustainability and cashflow upside. Even with profit recovery, persistent revenue declines limit operating leverage and increase dependency on pricing or cost cuts to sustain earnings.
Volatile leverage and balance‑sheet comparability
Large swings in reported leverage across periods reduce comparability and raise execution risk for capital allocation and separations. Historic leverage volatility complicates forecasting interest costs and constrain strategic flexibility when pursuing spin‑offs or acquisitions.
Pending acquisition raises regulatory and leverage risk
A definitive merger materially changes capital structure and governance; heavy debt financing and required regulatory clearances create execution and timing risk. Potential divestitures, scrutiny, or integration delays could pressure cash generation and strategic plans over the medium term.
Warner Bros (WBD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$67.31B
Dividend YieldN/A
Average Volume (3M)25.13M
Price to Earnings (P/E)―
Beta (1Y)1.33
Revenue Growth-4.29%
EPS GrowthN/A
CountryUS
Employees35,000
SectorCommunication Services
Sector Strength97
IndustryEntertainment
Share Statistics
EPS (TTM)-0.10
Shares Outstanding2,479,929,400
10 Day Avg. Volume31,058,634
30 Day Avg. Volume25,133,814
Financial Highlights & Ratios
PEG Ratio-0.92
Price to Book (P/B)1.99
Price to Sales (P/S)1.91
P/FCF Ratio23.10
Enterprise Value/Market Cap1.42
Enterprise Value/Revenue2.56
Enterprise Value/Gross Profit6.34
Enterprise Value/Ebitda5.88
Forecast
1Y Price Target
$29.68Price Target Upside9.36% Upside
Rating ConsensusHold
Number of Analyst Covering15
EPS Forecast (FY)-0.1
Revenue Forecast (FY)$37.53B
Warner Bros Business Overview & Revenue Model
Company DescriptionWarner Bros. Discovery, Inc. operates as a media and entertainment company worldwide. It operates through three segments: Studios, Network, and DTC. The Studios segment produces and releases feature films for initial exhibition in theaters; produces and licenses television programs to its networks and third parties and direct-to-consumer services; distributes films and television programs to various third parties and internal television; and offers streaming services and distribution through the home entertainment market, themed experience licensing, and interactive gaming. The Network segment comprises domestic and international television networks. The DTC segment offers premium pay-tv and streaming services. In addition, the company offers portfolio of content, brands, and franchises across television, film, streaming, and gaming under the Warner Bros. Motion Picture Group, Warner Bros. Television Group, DC, HBO, HBO Max, Max, Discovery Channel, discovery+, CNN, HGTV, Food Network, TNT Sports, TBS, TLC, OWN, Warner Bros. Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings brands. Further, it provides content through distribution platforms, including linear network, free-to-air, and broadcast television; authenticated GO applications, digital distribution arrangements, content licensing arrangements, and direct-to-consumer subscription products. Warner Bros. Discovery, Inc. was incorporated in 2008 and is headquartered in New York, New York.
How the Company Makes MoneyWarner Bros. Discovery generates revenue through multiple key streams. Primarily, the company earns money from content licensing and distribution, allowing its films and television shows to be aired on various platforms, including third-party networks and streaming services. Additionally, WBD operates subscription-based streaming services like HBO Max, which contribute significantly to its earnings. Advertising revenue from its television networks also serves as a major source of income, driven by viewership and advertising partnerships. Furthermore, WBD benefits from merchandise sales related to its popular franchises and licensing agreements with third-party companies. Strategic partnerships with other media companies and platforms enhance its distribution reach and revenue opportunities, contributing to its overall financial performance.
Warner Bros Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes income from different business areas like film, TV, and streaming, highlighting which segments drive growth and profitability.
Analyzes income from different business areas like film, TV, and streaming, highlighting which segments drive growth and profitability.
Data provided by:
The Fly
The FlyWarner Bros Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call emphasized strong creative and commercial momentum across studios, HBO/HBO Max streaming scale and subscriber targets, improved advertising trends, and sports/event engagement — balanced against persistent secular pressures in linear, an underwhelming recent games launch with a thin near-term pipeline, and investor focus on leverage around the Discovery Global separation. Management framed the highlights as durable and positioned for further monetization (price, ads, share enforcement) and believes Discovery Global's leverage profile is sustainable.Q4-2025 Updates
Positive Updates
Box Office and Film Slate Outperformance
Warner Bros. Motion Picture Group delivered seven consecutive films opening > $40,000,000, spent 16 total weeks atop the global box office, had nine films debut at #1, won nine Golden Globe Awards, and is up for 30 Academy Awards. The recent original films generated over $160,000,000 at the global box office in two weeks, including an $83,000,000 opening weekend.
Streaming Subscriber Scale and Outlook
HBO Max scaling globally: management is on track to reach >140,000,000 total streaming subscribers by the end of Q1 and expects to exceed 150,000,000 subscribers by the end of the year. Executives cited global launches (Germany, Italy, UK, Ireland) and continued international expansion as key drivers.
Strong Linear & Network Audience Share
WBD's portfolio attracted 30% of all prime-time cable viewing in the U.S., with HBO and linear networks delivering multiple breakout series and sequential audience growth (some shows seeing 30–50% audience growth versus prior seasons).
Significant Sports and Event Engagement
During the 2026 Milano Cortina Olympic Winter Games WBD more than tripled its streaming audience and saw >50% growth in linear hours viewed across Europe versus the 2022 Winter Games; WBD also reported 440 sports events in the past 12 months that reached ≥2,000,000 viewers.
Advertising Trends Improving
Management reported sequential improvement in advertising trends in Q4 that continued into Q1, with stronger scatter premiums, healthy upfronts, and positive international ad sales trends (management expects international ad sales to be flat to slightly up for the year).
Streaming Monetization & Product Levers
WBD identified multiple growth levers for streaming: stronger original content, major market launches, password-sharing enforcement scaling in 2026, product and engagement improvements, and monetization via price increases and ad tiers (management noted international ad fill rates remain relatively low, implying upside).
Studio & TV Creative Renaissance
Management emphasized a creative turnaround across Warner Bros. Motion Pictures, HBO, and Warner Bros. Television — retaining and adding top creative talent, rebuilding franchises (e.g., Minecraft, Superman, Batman) and delivering hit series that drove meaningful social engagement and high viewership metrics (examples: series averaging 13M, 24M, and 27M viewers per episode cited).
Discovery Global Separation and Capital Positioning
Management announced planned separation of Discovery Global with expected pro forma net leverage for Discovery Global around ~3.3x, which management believes is sustainable. They indicated expected credit ratings in the single-B to low double-B range and showed confidence in the standalone international/linear economics and profitability of Discovery+ in many markets.
Games Pipeline Reset and Upcoming Titles
After a reset, the games pipeline is being refocused on proven studios and franchises. Two notable 2026 releases were highlighted: a TT Games console/PC title launching in May and a mobile follow-up (Dragonfire) to Game of Thrones: Conquest launching in summer 2026; management emphasized past long-term returns from existing mobile titles.
Negative Updates
Secular Headwinds and Network Challenges
Management acknowledged persistent secular headwinds affecting linear TV and some parts of the business, and noted that international and domestic ad trends vary by region. CNN experienced ad sales headwinds earlier in the period (though audience uptick was later noted).
Advertising Headwinds from NBA Exposure
Management said the NBA created a headwind to ad sales in the period; while other sports (MLB playoffs, NHL) performed well, NBA-related costs/impacts were cited as an issue that affected advertising comparables.
Video Games: Recent Launch Failures and Pipeline Gaps
WBD conceded a 2024 games launch was 'unfortunately unsuccessful' and 2025 was a reset year; as a result, the 2026 pipeline is only modestly replenished and is expected to look similar to 2025, limiting near-term games contribution to EBITDA.
Password-Sharing and Monetization Still Early
Password-sharing enforcement is only in its 'second inning' and has not yet been globally expanded; monetization benefits from that initiative and international ad tiers are therefore still early and will take time to scale.
Investor Concerns Over Leverage and Separation
Investors have focused on Discovery Global leverage; while management projects ~3.3x net leverage and considers it sustainable, the separation and capital allocation remain a point of debate and scrutiny—management provided a proxy range of $0–$2,000,000,000 for certain items, signaling room for variability.
Operational Efficiency & Cost Actions Ongoing
Management referenced the need for continued efficiencies (including use of AI) and noted OpEx and cost savings targets for 2026 as part of the Discovery Global plan, implying ongoing restructuring/efficiency work and discretionary cost controls.
Company Guidance
Management's guidance emphasized streaming scale and spin‑off financials: HBO Max is on track to surpass 140 million total streaming subscribers by the end of Q1 2026 and to exceed 150 million by year‑end 2026, with streaming profits targeted to roughly triple by 2030; Discovery Global is expected to emerge with roughly 3.3x net leverage (proxy allowance of $0–$2.0 billion of flexibility) and likely single‑B to low double‑B ratings. They expect international ad sales to be flat to slightly up in 2026 and reported sequential advertising improvement into Q1, while U.S. linear networks delivered ~30% of prime‑time cable viewing; management also cited eight price increases to date (a 63% increase in value noted), Winter Games‑driven >50% growth in European linear hours and a >3x streaming audience lift, and strong theatrical KPIs (seven consecutive $40M+ openings, 16 weeks atop the global box office, nine #1 debuts, and >$160M box office in two weeks including an $83M opening weekend).Warner Bros Financial Statement Overview
Summary
Results show a meaningful earnings rebound to positive net income ($2.5B) and continued positive free cash flow ($3.1B). Offsetting this, revenue is still declining (~1.5% in 2025) and profitability/capital structure have been volatile across prior years, with free cash flow down ~25% versus the prior year.Income Statement
Profitability improved meaningfully in the latest annual period, swinging to positive net income ($2.5B) after large losses in 2024 and 2023, and gross margin held up (~44%). However, the revenue trajectory is soft (2025 revenue down ~1.5% with declines also in 2024), and operating profitability has been volatile with sizable EBIT losses in prior years—suggesting the earnings recovery is not yet firmly established.52
Neutral
Balance Sheet
The latest annual balance sheet shows very low reported leverage (debt-to-equity ~0.00) with a sizable equity base (~$35.9B) supporting a large asset base (~$100.1B), and return on equity recovered to ~7%. The key weakness is the sharp year-to-year inconsistency versus 2024–2022, when leverage was much higher (debt-to-equity ~0.97–1.16) and returns were negative, which raises questions about stability and comparability across periods.76
Positive
Cash Flow
Cash generation remains solid with positive operating cash flow ($4.3B) and free cash flow ($3.1B) in the latest annual period, continuing a multi-year pattern of positive free cash flow. That said, free cash flow declined materially versus the prior year (down ~25%), and cash flow conversion is only moderate (free cash flow about 0.71x net income; operating cash flow coverage ~0.35), indicating less cushion if profitability or working capital trends weaken.60
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 37.30B | 39.32B | 41.32B | 33.82B | 12.19B |
| Gross Profit | 10.51B | 16.35B | 16.80B | 13.38B | 7.57B |
| EBITDA | 9.42B | 11.61B | 22.37B | 14.17B | 7.15B |
| Net Income | 727.00M | -11.31B | -3.13B | -7.37B | 1.01B |
Balance Sheet | |||||
| Total Assets | 100.08B | 104.56B | 122.76B | 134.00B | 34.43B |
| Cash, Cash Equivalents and Short-Term Investments | 4.57B | 5.31B | 3.78B | 3.73B | 3.90B |
| Total Debt | 32.57B | 39.51B | 43.67B | 49.00B | 14.76B |
| Total Liabilities | 62.92B | 69.62B | 76.28B | 85.33B | 21.03B |
| Stockholders Equity | 35.92B | 34.04B | 45.23B | 47.09B | 11.60B |
Cash Flow | |||||
| Free Cash Flow | 3.09B | 4.43B | 6.16B | 3.32B | 2.42B |
| Operating Cash Flow | 4.32B | 5.38B | 7.48B | 4.30B | 2.80B |
| Investing Cash Flow | -546.00M | -349.00M | -1.26B | 3.52B | -56.00M |
| Financing Cash Flow | -4.87B | -3.75B | -5.84B | -7.74B | -853.00M |
Warner Bros Technical Analysis
Neutral
27.14
Price Trends
28.17
Negative
26.37
Positive
19.93
Positive
Market Momentum
-0.16
Positive
35.78
Neutral
9.31
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBD, the sentiment is Neutral. The current price of 27.14 is below the 20-day moving average (MA) of 28.26, below the 50-day MA of 28.17, and above the 200-day MA of 19.93, indicating a neutral trend. The MACD of -0.16 indicates Positive momentum. The RSI at 35.78 is Neutral, neither overbought nor oversold. The STOCH value of 9.31 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WBD.
Warner Bros Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $402.41B | 36.11 | 43.25% | ― | 15.49% | 35.54% | |
69 Neutral | $175.89B | 21.11 | 11.35% | 1.10% | 3.61% | 152.34% | |
68 Neutral | $23.21B | 34.54 | 16.22% | 0.75% | 14.91% | 9.30% | |
66 Neutral | $13.73B | 31.10 | 12.52% | 0.76% | -16.36% | 29.53% | |
66 Neutral | $23.21B | 30.69 | 16.22% | 0.85% | 14.91% | 9.30% | |
62 Neutral | $67.31B | -70.76 | 2.05% | ― | -4.29% | ― | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% |
* Communication Services Sector Average
WBD
Warner Bros
27.14
16.66
158.97%
NWSA
News Corp
23.70
-3.25
-12.04%
DIS
Walt Disney
99.29
1.02
1.04%
NFLX
Netflix
95.31
0.31
0.32%
FOXA
Fox
57.39
5.43
10.44%
FOX
Fox
52.03
3.86
8.02%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.