Warner Bros (WBD) AI Stock Analysis

• Market Cap: $70.83B
• Dividend Yield: N/A
• Average Volume (3M): 51.13M
• Price to Earnings (P/E): 152.3
• Beta (1Y): 1.24
• Revenue Growth: -4.29%
• EPS Growth: N/A
• Country: US
• Employees: 35,000
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): -0.06
• Shares Outstanding: 2,478,398,700
• 10 Day Avg. Volume: 26,289,688
• 30 Day Avg. Volume: 51,127,083
• PEG Ratio: >-0.01
• Price to Book (P/B): 0.76
• Price to Sales (P/S): 0.66
• P/FCF Ratio: 5.85
• Enterprise Value/Market Cap: 0.62
• Enterprise Value/Revenue: 1.17
• Enterprise Value/Gross Profit: 2.65
• Enterprise Value/Ebitda: 2.26
• 1Y Price Target: $25.61
• Price Target Upside: -10.39% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15
• EPS Forecast (FY): -0.21
• Revenue Forecast (FY): $36.91B

• Rating: 68 Neutral
• Price Target: $32.00 ▲(11.97% Upside)

Warner Bros. Discovery's overall stock score reflects a strong earnings call performance and technical momentum, offset by high valuation concerns and mixed financial performance. The company's strategic initiatives in streaming and box office leadership are promising, but challenges in revenue growth and valuation remain significant.

Positive Factors

Box Office Leadership

Leading the global box office with over $4 billion in revenue reinforces Warner Bros.' strong market position and brand strength, ensuring continued revenue streams from theatrical releases.

Streaming Subscriber Growth

Significant growth in streaming subscribers indicates successful global expansion and strengthens Warner Bros.' competitive position in the digital content market.

Debt Reduction

Effective debt reduction improves financial flexibility and reduces interest expenses, enhancing Warner Bros.' ability to invest in growth opportunities and withstand economic fluctuations.

Negative Factors

Declining Revenue Growth

A decline in revenue growth suggests potential challenges in maintaining market share and could impact future profitability if not addressed through strategic initiatives.

Linear Television Challenges

Challenges in the linear television segment highlight structural industry shifts towards digital, requiring Warner Bros. to adapt its strategy to sustain long-term revenue.

Low Return on Equity

Low ROE reflects inefficiencies in generating returns from shareholder equity, which could hinder Warner Bros.' ability to attract investment and finance growth initiatives.

Warner Bros Business Overview & Revenue Model

Company Description

Warner 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 Money

Warner 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 Financial Statement Overview

Summary

Warner Bros presents a mixed financial picture with positive profitability margins and strong cash flow metrics. However, challenges remain with declining revenue growth and low return on equity. The balance sheet is stable, but improving profitability and growth will be crucial for future success.

Income Statement

Warner Bros shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) data indicates a slight decline in revenue growth at -1.50%, which is concerning. However, the company has managed to maintain a positive net profit margin of 1.99% and a gross profit margin of 43.27%, indicating some level of profitability. The EBIT and EBITDA margins are also positive at 8.85% and 59.74%, respectively, showing operational efficiency. Despite these strengths, the negative revenue growth trend and past losses highlight potential risks.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.96, which is reasonable for the industry. The return on equity (ROE) is low at 2.21%, indicating limited profitability from equity. The equity ratio stands at 35.83%, suggesting a balanced capital structure. While the company has managed to reduce its debt levels, the low ROE and past negative equity returns are areas of concern.

Cash Flow

Warner Bros demonstrates strong cash flow management with a free cash flow to net income ratio of 79.74% and a positive free cash flow growth rate of 12.3% in the TTM period. The operating cash flow to net income ratio is 39.10%, indicating good cash generation relative to net income. These metrics suggest robust cash flow health, although the company should aim to improve its operating cash flow coverage ratio for better financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	37.86B	39.32B	41.32B	33.82B	12.19B	10.67B
Gross Profit	16.67B	16.35B	16.80B	13.38B	7.57B	6.81B
EBITDA	19.55B	11.61B	22.37B	14.17B	7.15B	6.69B
Net Income	485.00M	-11.31B	-3.13B	-7.37B	1.01B	1.22B
Balance Sheet
Total Assets	100.52B	104.56B	122.76B	134.00B	34.43B	34.09B
Cash, Cash Equivalents and Short-Term Investments	4.33B	5.31B	3.78B	3.73B	3.90B	2.09B
Total Debt	33.75B	39.51B	43.67B	49.00B	14.76B	15.40B
Total Liabilities	63.21B	69.62B	76.28B	85.33B	21.03B	21.70B
Stockholders Equity	36.02B	34.04B	45.23B	47.09B	11.60B	10.46B
Cash Flow
Free Cash Flow	4.13B	4.43B	6.16B	3.32B	2.42B	2.34B
Operating Cash Flow	5.23B	5.38B	7.48B	4.30B	2.80B	2.74B
Investing Cash Flow	-755.00M	-349.00M	-1.26B	3.52B	-56.00M	-703.00M
Financing Cash Flow	-3.72B	-3.75B	-5.84B	-7.74B	-853.00M	-1.55B

Warner Bros Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 28.58
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 28.58 is below the 20-day moving average (MA) of 28.61, above the 50-day MA of 26.35, and above the 200-day MA of 16.25, indicating a neutral trend. The MACD of 0.57 indicates Positive momentum. The RSI at 57.47 is Neutral, neither overbought nor oversold. The STOCH value of 35.63 is Neutral, 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	77 Outperform	$30.41B	16.20	17.33%	0.75%	14.91%	9.30%
FOX	76 Outperform	$30.41B	14.72	17.33%	0.85%	14.91%	9.30%
DIS	75 Outperform	$198.52B	16.24	11.78%	1.10%	3.61%	152.34%
NFLX	71 Outperform	$402.12B	36.76	42.86%	―	15.49%	35.54%
WBD	68 Neutral	$70.83B	152.35	1.36%	―	-4.29%	―
NWSA	67 Neutral	$15.50B	32.69	5.59%	0.76%	-16.36%	29.53%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%