Warner Bros (WBD) AI Stock Analysis

• Market Cap: $48.18B
• Dividend Yield: N/A
• Average Volume (3M): 68.39M
• Price to Earnings (P/E): 64.4
• Beta (1Y): 1.38
• Revenue Growth: -3.79%
• EPS Growth: N/A
• Country: US
• Employees: 35,000
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 0.63
• Shares Outstanding: 2,475,772,200
• 10 Day Avg. Volume: 111,111,263
• 30 Day Avg. Volume: 68,385,713
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.24
• Enterprise Value/Revenue: 1.55
• Enterprise Value/Gross Profit: 3.59
• Enterprise Value/Ebitda: 2.60
• 1Y Price Target: $14.61
• Price Target Upside: -19.95% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 68 Neutral
• Price Target: $20.50 ▲(12.33% Upside)

Warner Bros. Discovery's stock is buoyed by strong financial recovery and positive earnings call sentiment, despite operational challenges and high valuation concerns. The technical indicators suggest bullish momentum, but the high P/E ratio and lack of dividend yield pose valuation risks. The company's strategic initiatives and subscriber growth provide a positive outlook, but addressing operational inefficiencies and cash flow concerns is crucial for sustained growth.

Positive Factors

Subscriber Growth

The significant increase in subscribers indicates strong demand for streaming content, enhancing recurring revenue and market position.

Debt Reduction

Lower leverage improves financial stability and flexibility, allowing for better capital allocation and investment in growth opportunities.

Box Office Success

Consistent box office success strengthens brand reputation and revenue streams, supporting long-term profitability and market leadership.

Negative Factors

Negative Free Cash Flow Growth

Declining free cash flow limits the company's ability to invest in new projects and pay down debt, potentially affecting future growth.

Operational Challenges

Negative EBIT margin indicates ongoing operational inefficiencies, which could hinder profitability and require strategic adjustments.

Content Licensing Strategy Pressure

Changes in content licensing strategy may impact revenue stability, requiring careful management to maintain financial performance.

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 content creation and distribution. Key revenue sources include theatrical releases, television licensing, subscription fees from its streaming services such as HBO Max, and advertising revenue from its cable networks and digital platforms. The company also earns income from merchandise sales related to its franchises, as well as from partnerships with other media entities. Significant partnerships, such as those with cable providers and international distributors, enhance its reach and profitability. Additionally, the diversification into non-scripted content and reality TV has proven to be a lucrative avenue, capitalizing on changing viewer preferences.

Warner Bros Financial Statement Overview

Summary

Warner Bros demonstrates a solid recovery in revenue and profitability in the TTM, with improved margins and a balanced leverage position. However, operational challenges persist, as indicated by the negative EBIT margin. The cash flow situation is stable but shows signs of stress with declining free cash flow. Overall, the company is on a positive trajectory but must address operational inefficiencies and cash flow concerns to sustain growth.

Income Statement

Warner Bros shows a strong recovery in its TTM (Trailing-Twelve-Months) with a significant revenue growth rate of 26.3% and a positive net profit margin of 6.17%. The gross profit margin has improved to 52.74%, indicating efficient cost management. However, the EBIT margin remains negative, suggesting ongoing operational challenges. The EBITDA margin is healthy at 36.67%, reflecting strong earnings before interest, taxes, depreciation, and amortization.

Balance Sheet

The company's debt-to-equity ratio has improved to 0.96 in the TTM, indicating a balanced leverage position. Return on equity is positive at 6.82%, showing profitability for shareholders. The equity ratio stands at 35.44%, suggesting a stable capital structure. However, the company has experienced fluctuations in equity and debt levels over the years, which could pose risks.

Cash Flow

Operating cash flow is strong, but free cash flow has declined by 6.32% in the TTM. The operating cash flow to net income ratio is 0.41, indicating decent cash generation relative to net income. The free cash flow to net income ratio is 0.77, showing a good conversion of earnings to cash. However, the negative growth in free cash flow is a concern.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	38.44B	39.32B	41.32B	33.82B	12.19B	10.67B
Gross Profit	16.64B	16.35B	16.80B	13.38B	7.57B	6.81B
EBITDA	22.96B	11.61B	22.37B	14.17B	7.15B	6.69B
Net Income	768.00M	-11.31B	-3.13B	-7.37B	1.01B	1.22B
Balance Sheet
Total Assets	101.73B	104.56B	122.76B	134.00B	34.43B	34.09B
Cash, Cash Equivalents and Short-Term Investments	4.89B	5.31B	3.78B	3.73B	3.90B	2.09B
Total Debt	34.63B	39.51B	43.67B	49.00B	14.76B	15.40B
Total Liabilities	64.38B	69.62B	76.28B	85.33B	21.03B	21.70B
Stockholders Equity	36.05B	34.04B	45.23B	47.09B	11.60B	10.46B
Cash Flow
Free Cash Flow	4.07B	4.43B	6.16B	3.32B	2.42B	2.34B
Operating Cash Flow	5.10B	5.38B	7.48B	4.30B	2.80B	2.74B
Investing Cash Flow	-643.00M	-349.00M	-1.26B	3.52B	-56.00M	-703.00M
Financing Cash Flow	-3.36B	-3.75B	-5.84B	-7.74B	-853.00M	-1.55B

Warner Bros Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18.25
• 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 18.25 is above the 20-day moving average (MA) of 13.19, above the 50-day MA of 12.70, and above the 200-day MA of 10.72, indicating a bullish trend. The MACD of 1.45 indicates Negative momentum. The RSI at 76.44 is Negative, neither overbought nor oversold. The STOCH value of 91.98 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
NFLX	78 Outperform	510.87B	51.23	41.07%	―	14.28%	46.86%
FOXA	78 Outperform	24.84B	11.97	18.92%	0.94%	16.60%	57.39%
DIS	76 Outperform	207.88B	18.13	10.58%	0.86%	5.00%	144.65%
FOX	76 Outperform	24.84B	10.81	18.92%	1.04%	16.60%	57.39%
WBD	68 Neutral	$48.18B	64.44	2.18%	―	-3.79%	―
NWSA	67 Neutral	17.45B	36.71	13.45%	0.67%	-11.42%	75.42%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%