Warner Bros (WBD) AI Stock Analysis

• Market Cap: $22.39B
• Dividend Yield: N/A
• Average Volume (3M): 42.08M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.16
• Revenue Growth: -5.58%
• EPS Growth: -254.85%
• Country: US
• Employees: 35,000
• Sector: Communication Services
• Sector Strength: 83
• Industry: Entertainment
• EPS (TTM): -0.18
• Shares Outstanding: 2,474,075,000
• 10 Day Avg. Volume: 40,567,206
• 30 Day Avg. Volume: 42,079,989
• PEG Ratio: 2.97
• Price to Book (P/B): 0.65
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 4.70
• Enterprise Value/Market Cap: 2.53
• Enterprise Value/Revenue: 0.36
• Enterprise Value/Gross Profit: 3.46
• Enterprise Value/Ebitda: -26.32
• 1Y Price Target: $12.47
• Price Target Upside: 37.79% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17

Warner Bros scores moderately due to mixed financial performance with strong cash flow management but significant profitability and revenue growth issues. Technical analysis shows neutral signals, while valuation is impacted by negative earnings. However, the earnings call provides a positive outlook with strong subscriber growth and strategic initiatives in content and international expansion acting as key strengths.

Positive Factors

Corporate Reorganization

The corporate reorganization can provide greater flexibility to pursue efforts to unlock value.

Streaming Business Growth

WBD continues to show healthy growth at its streaming business, with 8% YoY top-line growth and adj. EBITDA likely to exceed the $1.3bn guidance for year.

Subscriber Growth

The company added 5.4 million subscribers in the quarter, with total subscriber growth of 20% YOY supported by domestic distribution deals and launching the service in additional territories.

Negative Factors

Advertising Environment

Analyst's recommendation remains neutral due to a challenged advertising environment, elevated domestic video subscriber declines, evolving direct-to-consumer marketplace, increased investments, and leverage.

Debt Leverage

Elevated debt leverage remains an impediment, in analyst's view.

Financial Performance

Reported revenues were $8,979 million, down 10% YOY. This figure was well below the estimate of $9,683 million and the consensus of $9,591 million.

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 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. Operational efficiencies are seen in a stable gross profit margin, but high operating expenses persist. The balance sheet shows improved leverage, though ROE remains negative. Cash flow generation is positive, supporting operations despite financial difficulties.

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.

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.

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.

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
-11.31B	-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
39.51B	47.28B	49.00B	14.76B	15.40B
	Net Debt
34.19B	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

• Technical Analysis Sentiment: Positive
• Last Price: 9.05
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• 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 9.05 is above the 20-day moving average (MA) of 8.81, below the 50-day MA of 9.25, and below the 200-day MA of 9.22, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 55.70 is Neutral, neither overbought nor oversold. The STOCH value of 63.00 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	81 Outperform	$24.12B	13.94	16.89%	0.96%	15.70%	26.73%
FOX	80 Outperform	$24.12B	12.89	16.89%	1.04%	15.70%	26.73%
DIS	78 Outperform	$202.53B	23.01	8.75%	0.84%	5.33%	431.28%
NFLX	75 Outperform	$507.13B	56.31	40.84%	―	14.11%	47.22%
WMG	64 Neutral	$14.29B	32.18	89.20%	2.56%	-0.91%	-14.87%
Sector *	60 Neutral	$14.09B	6.90	-3.35%	3.68%	2.44%	-36.27%
WBD	53 Neutral	$22.39B	―	-27.69%	―	-5.58%	-254.85%