Warner Bros (WBD) AI Stock Analysis

• Market Cap: $29.76B
• Dividend Yield: N/A
• Average Volume (3M): 57.10M
• 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: 84
• Industry: Entertainment
• EPS (TTM): -0.18
• Shares Outstanding: 2,474,075,000
• 10 Day Avg. Volume: 50,816,876
• 30 Day Avg. Volume: 57,098,799
• PEG Ratio: -0.60
• Price to Book (P/B): 0.88
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.90
• Enterprise Value/Market Cap: 2.13
• Enterprise Value/Revenue: 0.40
• Enterprise Value/Gross Profit: 3.48
• Enterprise Value/Ebitda: -9.21
• 1Y Price Target: $13.00
• Price Target Upside: 3.34% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 18

• Rating: 60 Neutral
• Price Target: $13.00 ▲(3.34%Upside)

Warner Bros Discovery's stock score is primarily influenced by strong technical indicators and positive sentiment from the recent earnings call, with significant subscriber growth and a robust content strategy. However, persistent profitability issues and a challenging valuation due to negative earnings temper the overall score.

Positive Factors

Box Office Success

A successful Superman opening and likely solid box office run confirms the evergreen character of DC Studios’ IP, especially in a likely glutted superhero market with Marvel postponing the next two MCU Avengers releases.

Company Valuation

The separation into two publicly traded entities is believed to unlock significant unrecognized value in the company.

Future Releases

The favorable reception supports the outlook for a high profile queue from DC Studios including 2026’s Supergirl and Clayface, more Batman releases, a new Wonder Woman in development and a Green Lantern TV show for HBO Max.

Negative Factors

Public Reaction

James Gunn’s remarks on Superman’s immigrant status admittedly created some hard MAGA backlash.

Streaming Financial Performance

Despite generating positive EBITDA, StreamCo (to be S&S) has been a drag on overall FCF, driven by cash content spend and capital expenditure to support Studios and HBO Max growth.

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 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 significant profitability issues, reflected in negative margins and net losses. Despite a moderately leveraged balance sheet and effective cash flow management, 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	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
EBITDA	-6.37B	6.38B	41.00M	3.65B	3.78B
Net Income	-11.31B	-3.13B	-7.30B	1.01B	1.22B
Balance Sheet
Total Assets	104.56B	122.76B	134.00B	34.43B	34.09B
Cash, Cash Equivalents and Short-Term Investments	5.31B	3.78B	3.73B	3.90B	2.09B
Total Debt	39.51B	43.67B	49.00B	14.76B	15.40B
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

• Technical Analysis Sentiment: Positive
• Last Price: 12.58
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 12.58 is above the 20-day moving average (MA) of 11.26, above the 50-day MA of 10.19, and above the 200-day MA of 9.76, indicating a bullish trend. The MACD of 0.55 indicates Negative momentum. The RSI at 76.57 is Negative, neither overbought nor oversold. The STOCH value of 90.09 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	$23.93B	13.83	16.89%	0.97%	15.70%	26.73%
FOX	80 Outperform	$23.93B	12.69	16.89%	1.06%	15.70%	26.73%
NFLX	79 Outperform	$536.33B	59.08	40.84%	―	14.11%	47.22%
DIS	78 Outperform	$213.90B	24.30	8.75%	0.84%	5.33%	431.28%
WMG	68 Neutral	$15.80B	35.23	89.20%	2.38%	-0.91%	-14.87%
WBD	60 Neutral	$29.76B	―	-27.69%	―	-5.58%	-254.85%
Sector *	55 Neutral	AU$3.56B	16.65	-1.37%	3.12%	4.07%	-17.03%