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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Warner Bros. Discovery, Inc. (XNAS:WBD) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
DISCA
Name:
WARNER BROS. DISCOVERY, INC. (XNAS:WBD)
Sector:
238.00M
Industry:
Entertainment
CEO:
Mr. David Zaslav
Total Employees:
11,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -67.08% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF WARNER BROS. DISCOVERY, INC.(WBD) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND ENTERTAINMENT INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
13.06
One Month Price Target:
$13.16
Six Month Price Target :
$13.66
Likely Price in One Year's Time:
Ticker:
$14.27
Likely Trading Range Today Under (Normal Volatility)
$12.97
Price Upper limit ($) :
$13.13
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$12.12
This week:
$10.96
This month :
$8.86
Other Primary facts
Market Cap:
30.66B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
2.43B
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
16.87%
-27.45%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$17.43
$15.46
$8.69
$10.66
Medium risk (<10%) entry points
Buy Call
Sell Call
$14.82
Buy Put:
Sell Put:
$14.40
$11.29
$11.72
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
DISCA
Sharpe Ratio:
-2.25%
Comparison:
DISCA, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -804.10% lower than the industry
& is -198.62% lower than the market/S&P 500 average
Average Returns/Yield of
DISCA
Daily returns:
-0.07%
Weekly returns:
-0.35%
Monthly returns:
-1.38%
Yearly returns:
6.78%
Comparison of returns:
Average annual returns/yield (last 3 years) is -344.68% below industry average
Classification:
DISCA, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.35
Statistical test of Returns:
DISCA has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.47%
Weekly Volatility:
7.76%
Monthly Volatility:
15.51%
Yearly Volatility:
53.74%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.69%
Volatility in last five trading days has been -80.02% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-7.19%
Weekly VaR:
-16.09%
Monthly VaR:
-32.17%
How Much Can the price of
DISCA
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-29%
Worst case (decline):
>85%
This translates to price declining to:
$9.24
This translates to price declining to:
$1.96
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
DISCA is a 127.07% riskier investment compared to the market/S&P 500 & is 94.53% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 1.56% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
DISCA
Beta in relation to market/S&P 500--1.37
Expected beta in 1 year's time:
1.085
Expected beta in 3 year's time:
1.535
Unlevered (debt free) Beta:
0.712
Beta in relation to Nasdaq (XNAS):
0.723
Beta in relation to all global stocks::
0.634
Beta Comparison & Analysis
Beta of competitors/peers::
1.242
Beta is 10.64% higher than peers
Average Industry Beta:
1.34
Beta is 2.51% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
11.16%
Sustainable growth rate is -68.68% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.292
Alpha is 425.49% above industry average alpha yield
Alpha is -1856% below the market average
Analysis of Cost of Capital of
DISCA
Equity cost of capital:
0.126
Equity cost of capital is 1.87% above industry mean WACC
Unlevered (without debt) cost of capital:
6.51%
Before-tax cost of debt:
4.33%
After-tax cost of debt:
3.42%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.42%
WACC is -0.05% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$5.17
Revenue growth rate per share of (3Y):
2.34
Annual revenue growth rate is -43.40% below industry average
EPS:
-
Expected Annual growth rate of EPS (3Y):
-19.02%
Expected future EPS growth rate is -160.14% lower than the Entertainment industry
Free cash flow (FCF) per share:
$81.72
-
-
Debt per share
$5.60
EBITDA per share
$3.19
Valuation Analysis Today of
DISCA
P/E Ratio:
7.23
P/E Ratio of Competitors/Peers:
34.76
P/E ratio is -79.21% lower than main peers & is -73.27% lower than the industry
-
-
-
-
P/S (Price to Sales ratio):
2.52
Price to sales ratio is -4.63% below the industry mean
P/B (Price to book value ratio):
2.34
Price to free cash flow: 0.16
Price to free cash flow ratio is -75.67% lower than the industry
Net income growth rate (3Y):
67.68%
Net income growth rate is -132.85% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
113.67%
Net debt to equity ratio:
85.53%
Debt to assets ratio:
40.25%
Net debt to assets ratio:
30.29%
Debt-to-asset ratio is -43.46% below industry average
Ability to repay debt:
Interest coverage ratio:
12.44
Interest coverage ratio is -83.27% less than industry average
Looking forward:
Debt growth rate:
-4.19%
Annual debt growth is -101% lower than industry average debt growth rate
Debt repayment rate in last quarter: 2.35%
Analysis of Key Statistics
Correlation of price movement with the market:
0.43
Statistical significance of correlation:
DISCA has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.508
Stock price is -15.34% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.508
Correlation of price movement with Nasdaq (^IXIC):
0.006
Covariance of price movement with the market:
0.012
Kurtosis
7
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.797
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
DISCA
Gross Profit Margin Ratio:
244%
Operating Profit Margin Ratio:
15.72%
Operating profit margin is 138.19% higher than the industry
Net Profit Margin Ratio:
244%
Effective Tax Rate:
18.27%
Effective tax rate is 17.75% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
11.05%
Return on equity (ROE) is -78.61% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
3.91%
Return on assets (ROA) is -9.65% lower than the industry
Financial Leverage:
1.7x
Current Ratio:
2.01
Current ratio is 23.03% above industry average
Cash Conversion Cycle (days):
40.7
Cash conversion cycle is -15.88% below industry average
The remaining useful life of property plant & equipment is: 5.0 years
Stock based compensation to net income ratio:
4.54%
In-depth Efficiency Analysis
Revenue generated per employee:
1.1M
Each employee generates 18% more revenue than industry average revenue per employee
EBITDA generated per employee:
704.8K
Each employee generates 103% more EBITDA than industry average revenue per employee
Profit generated per employee:
120.2K
Each employee generates 5% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
21.6K
Each employee generates -61841% less free cash flow than industry average revenue per employee
Assets/Capital per employee
2.4M
Each employee generates -61841% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
DISCA
DISCOVERY, INC. (XNAS:DISCB)
DISCOVERY, INC. (XNAS:DISCK)
LIBERTY GLOBAL PLC (XNAS:LBTYK)
LIBERTY GLOBAL PLC (XNAS:LBTYB)
Bilibili Inc. (XNAS:BILI)
ZILLOW GROUP, INC. (XNAS:Z)
ZILLOW GROUP, INC. (XNAS:ZG)
NEWS CORPORATION (XNAS:NWSA)
NEWS CORPORATION (XNAS:NWS)
Current Analyst Ratings
Strong buy�8%
Buy�8%
Hold�71%
Sell�8%
Strong sell�4%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
12.56B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
4.89B
7.67B
-
-
4.01B
-
1.75B
5.75B
19.00M
623.00M
5.48B
7.75B
1.97B
1.32B
1.81B
331.00M
1.32B
Statement of Cash Flow
Date:
Period:
1.50B
Differed Income Tax :
- 118000.00K
Stock Based Compensation :
60.00M
Change in Working Capital :
- 1132000.00K
Accounts Receivables:
-
Other Working Capital:
- 1003000.00K
Other Non-Cash Items:
- 460000.00K
Net Cash Provided by Operating Activities:
323.00M
Investments in PP&E:
- 85000.00K
Net Acquisitions:
-
Purchases of Investments:
- 42000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
4.16B
-
4.16B
2.43B
-
585.00M
7.17B
1.33B
12.87B
9.74B
-
-
2.69B
26.63B
-
33.80B
521.00M
794.00M
-
281.00M
1.97B
3.56B
13.61B
1.96B
16.68B
-
20.24B
7.00M
10.03B
- 947000.0K
2.88B
March 31, 2022 at 6:00:00 AM
10.64B
11.97B
32.21B
-
14.40B
10.2B
639.00M
17.00M
529.00M
- 327000.00K
-
-
-
- 260000.00K
- 587000.00K
- 5000.00K
260.00M
4.17B
3.91B
323.00M
- 85000.00K
238.00M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
DISCA
2023
2024
2025
2026
2027
$10.70
$11.69
$12.77
$13.95
$15.23