WBD - Warner Bros. Trading At 3X Earnings Despite Growth Potential

2024-06-21 12:30:06 ET

Summary

• WBD is using Networks cash flows to deleverage and finance the DTC push. Once leverage targets are reached, the company will be able to buy back stock.
• DTC is at an inflection point and profitability is expected for FY2025. A portfolio of leading content franchises will help the business to continue growing.
• WBD is currently trading at 3X underlying earnings as the market seems to ignore the growth potential.

Warner Bros. ( WBD ) seems to be struggling to convince the markets that it can grow. Despite strong free cash flow generation and significant debt reduction, the company’s share price is continuing its downward trajectory.

As can be seen from the quantitative factor grades of Seeking Alpha, the most attractive features of WBD stock seem to be valuation and profitability, while growth is ranked “D- “, down from “A” 6 months ago. The stock price is down ~40% over this period....

For further details see: