Warner Bros. Discovery, Inc. (WBD) Stock Analysis
Warner Bros. Discovery, Inc. (WBD) Stock Analysis
Analysis from 10-Q filed 2025-11-06. Data as of Q4 2025.
Overall Grade: F (Concerning)
Warner Bros. Discovery, Inc. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 0.5% | Below expectations |
| FCF Margin | 8.3% | Healthy cash flow |
| Debt/Equity | 0.9x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
Explore Warner Bros. Discovery, Inc.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: Warner Bros. Discovery, Inc. earns 0.5% ROIC, Bottom 50% in Communication Services
Warner Bros. Discovery, Inc.'s trailing-twelve-month ROIC of 0.5% ranks Bottom 50% in Communication Services companies (sector median: 1.8%), driven by NOPAT margin of 0.9% combined with asset turnover of 0.4x. Source: 10-Q filed 2025-11-06. Gross margin of 44.0% with operating margin at 2.0% reflects strong pricing power.
| Metric | WBD | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 0.5% | Red flag | Below sector median of 1.8% |
| Return on Equity (ROE) | 2.1% | Warning | Moderate equity returns |
| Gross Margin | 44.0% | Good | Strong pricing power |
| Operating Margin | 2.0% | Warning | Moderate operational efficiency |
Cash Flow: Warner Bros. Discovery, Inc. generates $3.1B FCF at 8.3% margin, positive NaN/8 quarters
Warner Bros. Discovery, Inc. generated $3.1B in free cash flow (TTM), a 8.3% FCF margin, a margin that ranks Top 50% in Communication Services. Operating cash flow exceeds net income by 5.9x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-06.
| Metric | WBD | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 8.3% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $3.1B | Good | Positive cash generation |
| OCF/Net Income | 5.9x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: Warner Bros. Discovery, Inc. at 0.9x leverage
Warner Bros. Discovery, Inc.'s debt-to-equity ratio of 0.9x reflects elevated leverage. Total debt of $32.6B offset by $4.6B in cash. Source: 10-Q filed 2025-11-06.
| Metric | WBD | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.9x | Adequate | Moderate leverage |
| Net Cash Position | $-28.0B | Warning | Net debt position |
Valuation: Warner Bros. Discovery, Inc. trades at 99.4x earnings
Warner Bros. Discovery, Inc. trades at a P/E of 99.4x. Free cash flow yield of 4.3% reflects market expectations for growth.
| Metric | WBD | Rating | Context |
|---|---|---|---|
| P/E Ratio | 99.4x | Warning | Premium valuation |
| EV/Sales | 2.7x | Good | Attractive revenue multiple |
| FCF Yield | 4.3% | Good | Lower cash yield |
Capital Allocation: Warner Bros. Discovery, Inc. returns 0.0% shareholder yield
Warner Bros. Discovery, Inc.'s total shareholder yield is 0.0% (dividends + buybacks). Source: 10-Q filed 2025-11-06.
| Metric | WBD | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 0.0% | Warning | Dividend + buyback yield combined |
| Total Capital Returned (TTM) | $0 | Adequate | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 0.5% | Bottom 50% | 0.3x below |
| Free Cash Flow Margin | 8.3% | Top 50% | 1.5x above |
| Gross Margin | 44.0% | Bottom 50% | 0.8x below |
| Operating Margin | 2.0% | Bottom 50% | 0.5x below |
| Return on Equity (ROE) | 2.1% | Top 50% | 11.2x above |
| P/E Ratio | 99.4x | N/A | - |
Financial Scorecard
| Metric | WBD | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 0.5% | Red flag | Bottom 50% of sector (median: 1.8%) |
| Free Cash Flow Margin | 8.3% | Adequate | Top 50% of sector (median: 5.4%) |
| Gross Margin | 44.0% | Good | Bottom 50% of sector (median: 56.8%) |
| Debt to Equity Ratio | 90.7% | Adequate | Elevated but manageable |
| P/E Ratio (Price-to-Earnings) | 99.4x | Warning | High expectations priced in |
| Free Cash Flow Yield | 4.3% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is Warner Bros. Discovery, Inc.'s Return on Invested Capital (ROIC)?
Warner Bros. Discovery, Inc. (WBD) has a trailing twelve-month Return on Invested Capital (ROIC) of 0.5%. This compares below the sector median of 1.8%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is Warner Bros. Discovery, Inc.'s Free Cash Flow Margin?
Warner Bros. Discovery, Inc. (WBD) has a free cash flow margin of 8.3%, generating $3.1 billion in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is Warner Bros. Discovery, Inc. stock overvalued or undervalued?
Warner Bros. Discovery, Inc. (WBD) trades at a P/E ratio of 99.4x, which is above the sector median of N/A. The EV/Sales multiple is 2.7x. Free cash flow yield is 4.3%, which is in line with market averages.
Q: How much debt does Warner Bros. Discovery, Inc. have?
Warner Bros. Discovery, Inc. (WBD) has a debt-to-equity ratio of 0.9x with total debt of $32.6 billion. Net debt position is $28.0 billion.
Q: What is Warner Bros. Discovery, Inc.'s revenue and earnings growth?
Warner Bros. Discovery, Inc. (WBD) declined revenue by 5.1% year-over-year. Revenue decline may indicate market challenges or industry headwinds.
Q: How does Warner Bros. Discovery, Inc. compare to competitors in Communication Services?
Compared to other companies in Communication Services, Warner Bros. Discovery, Inc. (WBD) shows: ROIC of 0.5% is below the sector median of 1.8% (Bottom 36%). FCF margin of 8.3% exceeds the sector median of 5.4% (Top 42% of sector). Gross margin at 44.0% is 12.8 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Communication Services companies with available SEC filings.
Q: What warning signs should I watch for with Warner Bros. Discovery, Inc.?
Warner Bros. Discovery, Inc. (WBD) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-06. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.