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Warner Bros (WBD)
NASDAQ:WBD
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Warner Bros
(NASDAQ:WBD)
58Neutral
Positive Factors
Forecast Upgrade
The company upgraded its forecast for EBITDA profits in 2025 to $1.3 billion, or nearly double the 2024 level.
Strategic Decisions
The decision not to sign a long-term rights renewal with the NBA appears to have been the right one given industry pressures in linear TV.
Subscriber Growth
Strong subscriber growth is expected, and the company is expanding internationally with new launches planned in Australia, UK, Ireland, Germany, and Italy.
Negative Factors
Advertising Revenue
Total advertising revenues fell by 12% year over year.
Leverage Concerns
Leverage remains elevated at 3.8x.
Market Competition
Strategically, there is concern that WBD is too small to compete and that the gap with competitors is widening over time.
Warner Bros (WBD) vs. S&P 500 (SPY)
Market Cap
$22.73B
Dividend YieldN/A
Average Volume (3M)48.18M
Price to Earnings (P/E)―
Beta (1Y)1.36
Revenue Growth-4.91%
EPS Growth-259.71%
CountryUS
Employees35,000
SectorCommunication Services
Sector Strength98
IndustryEntertainment
Share Statistics
EPS (TTM)-4.62
Shares Outstanding2,454,764,400
10 Day Avg. Volume55,334,508
30 Day Avg. Volume48,176,889
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.67
Price to Cash Flow (P/CF)2.40
P/FCF Ratio1.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.81Price Target Upside58.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Warner Bros Business Overview & Revenue Model
Company DescriptionWarner Bros. Discovery, Inc. (WBD) is a global leader in entertainment and media, operating across various sectors including film, television, and digital content. The company is renowned for its expansive library of films and television series, iconic franchises, and a diverse range of networks and streaming services. With a legacy of pioneering creativity, Warner Bros. produces, distributes, and licenses a broad array of content spanning multiple genres and formats, serving audiences worldwide.
How the Company Makes MoneyWarner Bros. Discovery makes money through multiple revenue streams, primarily driven by its film and television production and distribution activities. The company generates significant revenue from box office sales, home entertainment, and digital distribution of films. Its television segment contributes through network broadcasting, cable subscriptions, and syndication of television series. Additionally, WBD leverages its extensive content library to license films and shows to various platforms, including streaming services. The company's own streaming platforms, such as HBO Max, provide a growing source of subscription revenue. Merchandise licensing and sales related to its popular franchises also contribute to its earnings. Strategic partnerships, advertising sales, and international operations further enhance Warner Bros. Discovery's revenue potential.
Warner Bros Financial Statement Overview
Summary
Warner Bros faces significant profitability challenges with negative net income and declining revenue. While operational efficiencies are reflected in a stable gross profit margin, the company struggles with high operating expenses. The balance sheet shows improved leverage but ROE remains negative. Cash flow generation is a bright spot, supporting operations despite financial difficulties. Strategic adjustments are crucial for long-term financial health.Income Statement
Warner Bros experienced a decline in revenue from 2023 to 2024, with a negative revenue growth rate of -4.84%. The company has been struggling with profitability as evidenced by negative EBIT and EBITDA margins. Net income has also been negative, leading to a challenging net profit margin. Despite this, gross profit margin remains positive, indicating some operational efficiencies.45
Neutral
Balance Sheet
The company has a moderate equity ratio of 32.54% in 2024, reflecting a balanced capital structure. However, the debt-to-equity ratio has significantly improved from 2023 to 2024, indicating reduced leverage. Return on equity is negative, reflecting the impact of negative net income on shareholder returns.50
Neutral
Cash Flow
Warner Bros has managed to maintain a positive operating cash flow to net income ratio, indicating effective cash generation despite reported losses. Free cash flow remains positive, but has decreased from the previous year. The cash flow stability supports ongoing operations and investment activities, though growth in free cash flow is limited.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 39.32B | 41.32B | 33.82B | 12.19B | 10.67B | Gross Profit |
| 16.35B | 16.80B | 13.38B | 7.57B | 6.81B | EBIT |
| -10.03B | -1.55B | -3.58B | 2.01B | 2.52B | EBITDA |
| -6.37B | 6.38B | 41.00M | 3.65B | 3.78B | Net Income Common Stockholders |
| -11.29B | -3.13B | -7.30B | 1.01B | 1.22B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 5.31B | 3.78B | 3.73B | 3.90B | 2.09B | Total Assets |
| 104.56B | 122.76B | 134.00B | 34.43B | 34.09B | Total Debt |
| 2.75B | 47.28B | 49.00B | 14.76B | 15.40B | Net Debt |
| -2.56B | 42.97B | 45.27B | 10.85B | 13.31B | Total Liabilities |
| 69.62B | 76.28B | 85.33B | 21.03B | 21.70B | Stockholders Equity |
| 34.04B | 45.23B | 47.09B | 11.60B | 10.46B |
| Cash Flow | Free Cash Flow | |||
| 4.43B | 6.16B | 3.32B | 2.42B | 2.34B | Operating Cash Flow |
| 5.38B | 7.48B | 4.30B | 2.80B | 2.74B | Investing Cash Flow |
| -349.00M | -1.26B | 3.52B | -56.00M | -703.00M | Financing Cash Flow |
| -3.75B | -5.84B | -7.74B | -853.00M | -1.55B |
Warner Bros Technical Analysis
Negative
8.10
Price Trends
10.33
Negative
10.36
Negative
9.11
Negative
Market Momentum
<0.01
Positive
44.10
Neutral
28.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBD, the sentiment is Negative. The current price of 8.1 is below the 20-day moving average (MA) of 9.98, below the 50-day MA of 10.33, and below the 200-day MA of 9.11, indicating a bearish trend. The MACD of <0.01 indicates Positive momentum. The RSI at 44.10 is Neutral, neither overbought nor oversold. The STOCH value of 28.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WBD.
Warner Bros Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $22.46B | 11.02 | 20.09% | 1.05% | 4.29% | 177.70% | |
81 Outperform | $22.46B | 10.21 | 20.09% | 1.13% | 4.29% | 177.70% | |
77 Outperform | $165.30B | 29.69 | 5.54% | 1.04% | 3.97% | 89.53% | |
74 Outperform | $15.48B | 30.52 | 100.20% | 2.39% | 0.75% | 9.36% | |
74 Outperform | $404.43B | 46.46 | 38.43% | ― | 15.28% | 65.72% | |
58 Neutral | $26.94B | 3.15 | -10.67% | 4.32% | 2.14% | -43.11% | |
58 Neutral | $22.73B | ― | -28.54% | ― | -4.91% | -259.71% |
* Communication Services Sector Average
Performance Comparison
WBD
Warner Bros
8.10
-0.44
-5.15%
DIS
Walt Disney
85.23
-30.87
-26.59%
NFLX
Netflix
921.17
292.39
46.50%
FOXA
Fox
49.52
19.13
62.95%
FOX
Fox
46.01
18.11
64.91%
WMG
Warner Music Group
28.91
-4.83
-14.32%
Warner Bros Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -22.86% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a positive trajectory for Warner Bros. Discovery with strong growth in direct-to-consumer subscriptions and successful affiliate agreements. However, challenges remain in the linear television segment and ad sales, balancing the overall sentiment.Highlights
Strong Growth in Direct-to-Consumer Business
Warner Bros. Discovery's direct-to-consumer business ended 2024 with about 117 million subscribers, adding 6.5 million subscribers in Q4 and nearly 20 million in less than a year. The segment contributed almost $700 million in EBITDA, a $3 billion improvement in two years.
Successful Affiliate Agreements
The company struck multi-year renewal agreements with five of the six largest pay TV providers in America, securing rate increases and providing stability to the linear business.
International Expansion Plans
Warner Bros. Discovery plans to launch in key markets like the U.K., Italy, Germany, and Australia, aiming for at least 150 million subscribers by the end of 2026.
Lowlights
Linear Television Pressures
The company faces near-term linear pressure as it adds direct-to-consumer options and packaging flexibility, with expectations of slower rate increases in domestic affiliate business.
Challenges in Ad Sales
Q4 ad sales were weaker than expected, with CNN not benefiting as hoped from elections. Some mild positive signals from the ad market were noted, but no significant change is expected.
Company Guidance
During the Warner Bros. Discovery fourth quarter 2024 earnings call, the company provided a range of metrics and forward-looking guidance. The direct-to-consumer (DTC) business ended 2024 with approximately 117 million subscribers across over 70 countries, adding 6.5 million in the fourth quarter and nearly 20 million in less than a year. The company aims to reach at least 150 million subscribers by the end of 2026, anticipating further revenue and EBITDA growth. The direct-to-consumer sector contributed about $700 million in EBITDA, marking a $3 billion improvement over two years, with expectations to nearly double EBITDA in 2025. Warner Bros. Discovery's studio business is targeting $3 billion or more in EBITDA, driven by growth and strength in its television and film sectors, with a strong creative and financial outlook for 2025. Despite challenges in linear television, the company secured multi-year renewal agreements with five of the six largest pay TV providers in America, ensuring stability in its linear business. Overall, Warner Bros. Discovery is focused on enhancing shareholder value and expects significant progress in transforming its business model and financial outcomes.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.