Warner Brothers Discovery, inc. (WBD) took Wall Street by storm today, surging 4.7% during regular trading hours. Ending the day at $17.5, WBD shares are still well below their 52 week high of $31.55. Indeed, the stock's 52 week performance is - 42.8%, which amounts to a -36.6% underperformance of the S&P 500.
The media conglomerate is currently -40.2% below its average target price of $29.25 and has an average analyst rating of buy. Its trailing 12 month price to earnings (P/E) ratio is 8.8, which is its share price divided by its trailing earnings per share (Eps) of $2. The company has a forward P/E ratio of 12.2 based on its forward Eps of $1.43.
Warner Bros' gross profit margins are 61.1%, which may indicate that it enjoys a sustained competitive advantage over its peers. Such high margins can indicate significant freedom in choosing to prices, which is a good sign for investors. The company's year on year (YOY) quarterly earnings are growing at a rate of 226.7% and its YOY quarterly revenues are increasing at a rate of 13.1%, which shows that the company's profit margins are widening as its revenues from sales are increasing at a faster rate than its expenses.
WBD's levered free cashflow is $7,167,374,848, which represents the sum of inflows and outflows of cash from all sources, including capital expenses and overhead. This is the pool of liquidity that the company can use to reinvest in its business or pay out to its equity investors in the form of a dividend. Despite having cash on hand for this purpose, Warner Bros has not offered a dividend within the last twelve months.
An additional metric of a company's valuation is its Price to Book (P/B) Ratio, which consists in its share price divided by its book value per share. Book value represents the amount of money that would be available to equity holders if the company company were to sell all of its assets and pay off all of its debts today. Warner Bros has a P/B ratio of 1.0 indicates that the market value of the company's book value and market value are equivalent.
Warner Brothers presents several indicators of a potentially undervalued stock. Be sure to do your own research before making an investment decision, especially focusing on qualitative aspects of the company -- as numbers don't usually tell the whole story. For more daily updates on market moving stocks, be sure to subscribe to our free newsletter!
