Warner Bros (WBD) AI Stock Analysis

• Market Cap: $27.59B
• Dividend Yield: N/A
• Average Volume (3M): 46.92M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.19
• Revenue Growth: -5.58%
• EPS Growth: -254.85%
• Country: US
• Employees: 35,000
• Sector: Communication Services
• Sector Strength: 88
• Industry: Entertainment
• EPS (TTM): -0.18
• Shares Outstanding: 2,474,075,000
• 10 Day Avg. Volume: 54,722,519
• 30 Day Avg. Volume: 46,919,711
• PEG Ratio: 0.03
• Price to Book (P/B): 1.77
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.63
• Enterprise Value/Market Cap: 2.31
• Enterprise Value/Revenue: 0.41
• Enterprise Value/Gross Profit: 3.50
• Enterprise Value/Ebitda: -9.26
• 1Y Price Target: $12.31
• Price Target Upside: 13.25% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 18

• Rating: 59 Neutral
• Price Target: $11.50 ▲(5.80%Upside)

The overall stock score is driven by strong performance in the earnings call, highlighting subscriber growth and EBITDA improvements. However, financial performance and valuation scores are weighed down by declining revenues and negative profitability, while technical indicators show bullish momentum but approach overbought levels.

Positive Factors

Acquisition Potential

Warner Bros. Studio is considered the crown jewel of all studios in media, with potential for greater flexibility and attractiveness as an acquisition target once unburdened by debt.

Company Restructuring

The separation of WBD into two publicly traded entities is expected to unlock significant unrecognized value of the company.

Investor Interest

Streaming & Studios as a standalone public company is anticipated to attract significant investor interest.

Negative Factors

Competitive Disadvantage

WBD's competitors are large, and by splitting in half, both pieces will be even more sub-scale, which may become a growing threat to their survival.

Credit Rating Downgrade

S&P downgraded WBD's credit rating to BB+ citing continued revenue and cash flow declines, and post-split, fewer assets in each company could result in further downgrades.

Management Distraction

The split will likely distract senior management for 9–12 months to focus on financial engineering, which is not a long-term value creation tool.

Warner Bros Business Overview & Revenue Model

Company Description

Warner Bros. Discovery, Inc. (WBD) is a leading global media and entertainment company that specializes in the creation, production, and distribution of a wide range of content across various platforms. The company operates in several sectors, including film, television, and digital media, and is renowned for its iconic brands and franchises. WBD's core products and services include feature films, television series, and digital content, catering to diverse audiences around the world.

How the Company Makes Money

Warner Bros. Discovery generates revenue through multiple streams, primarily from its content production and distribution activities. The company earns money from box office sales of its feature films and licensing deals for television programming. Additionally, WBD benefits from subscription revenue through its streaming services, which include HBO Max and Discovery+, offering access to their expansive content libraries. Advertising sales from its networks and digital platforms also contribute significantly to its earnings. Moreover, the company engages in strategic partnerships and collaborations to enhance its content offerings and expand its global reach, further bolstering its revenue potential.

Warner Bros Financial Statement Overview

Summary

Warner Bros faces challenges with declining revenues and persistent profitability issues, as indicated by negative margins and net losses. The balance sheet is moderately leveraged, maintaining some degree of financial stability. The company demonstrates effective cash flow management, yet profitability concerns persist, impacting future growth and shareholder value.

Income Statement

Warner Bros exhibits declining revenue with a negative trend in profitability. The TTM (Trailing-Twelve-Months) gross profit margin is 47.47%, indicating a strong ability to cover production costs, but the net profit margin is heavily negative at -28.53%, showing significant net losses. EBIT and EBITDA margins are also negative, reflecting operational challenges. Revenue growth is inconsistent with a recent negative trend, which poses concerns for future profitability.

Balance Sheet

The company's balance sheet reveals a moderately leveraged position with a debt-to-equity ratio of 1.11, which is manageable but could limit financial flexibility. The equity ratio is 33.29%, indicating a fair portion of the assets are financed by equity. However, the return on equity is currently negative due to net losses, reflecting challenges in generating shareholder returns.

Cash Flow

Cash flow metrics show a positive trend with a free cash flow growth rate of 5.78% from the previous year, indicating effective management of capital expenditures. The operating cash flow to net income ratio is positive, suggesting strong cash generation relative to net income losses. However, free cash flow to net income remains negative, reflecting ongoing profitability issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	26.00B	39.32B	41.32B	33.82B	12.19B	10.67B
Gross Profit	11.44B	16.35B	16.80B	13.38B	7.57B	6.81B
EBITDA	-692.00M	-6.37B	6.38B	41.00M	3.65B	3.78B
Net Income	-5.21B	-11.31B	-3.13B	-7.30B	1.01B	1.22B
Balance Sheet
Total Assets	32.44B	104.56B	122.76B	134.00B	34.43B	34.09B
Cash, Cash Equivalents and Short-Term Investments	745.00M	5.31B	3.78B	3.73B	3.90B	2.09B
Total Debt	16.34B	39.51B	43.67B	49.00B	14.76B	15.40B
Total Liabilities	21.70B	69.62B	76.28B	85.33B	21.03B	21.70B
Stockholders Equity	8.71B	34.04B	45.23B	47.09B	11.60B	10.46B
Cash Flow
Free Cash Flow	1.62B	4.43B	6.16B	3.32B	2.42B	2.34B
Operating Cash Flow	2.34B	5.38B	7.48B	4.30B	2.80B	2.74B
Investing Cash Flow	3.72B	-349.00M	-1.26B	3.52B	-56.00M	-703.00M
Financing Cash Flow	-6.51B	-3.75B	-5.84B	-7.74B	-853.00M	-1.55B

Warner Bros Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 10.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBD, the sentiment is Positive. The current price of 10.87 is above the 20-day moving average (MA) of 10.27, above the 50-day MA of 9.37, and above the 200-day MA of 9.53, indicating a bullish trend. The MACD of 0.42 indicates Negative momentum. The RSI at 68.65 is Neutral, neither overbought nor oversold. The STOCH value of 85.58 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WBD.

Warner Bros Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOXA	81 Outperform	$24.09B	13.92	16.89%	0.96%	15.70%	26.73%
FOX	80 Outperform	$24.09B	12.78	16.89%	1.05%	15.70%	26.73%
NFLX	79 Outperform	$542.71B	61.74	40.84%	―	14.11%	47.22%
DIS	78 Outperform	$214.69B	24.39	8.75%	0.84%	5.33%	431.28%
WMG	64 Neutral	$13.65B	30.44	89.20%	2.75%	-0.91%	-14.87%
Sector *	61 Neutral	$40.08B	-1.19	-13.44%	3.97%	2.29%	-73.14%
WBD	59 Neutral	$27.59B	―	-27.69%	―	-5.58%	-254.85%