Stock Analysis on Net

Warner Bros. Discovery Inc. (NASDAQ:WBD)

This company has been moved to the archive! The financial data has not been updated since November 4, 2022.

Capital Asset Pricing Model (CAPM)

Microsoft Excel

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Warner Bros. Discovery Inc. common stock.


Rates of Return

Warner Bros. Discovery Inc., monthly rates of return

Microsoft Excel
Warner Bros. Discovery Inc. (WBD) Standard & Poor’s 500 (S&P 500)
t Date PriceWBD,t1 DividendWBD,t1 RWBD,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2017 $28.35 2,278.87
1. Feb 28, 2017 $28.76 1.45% 2,363.64 3.72%
2. Mar 31, 2017 $29.09 1.15% 2,362.72 -0.04%
3. Apr 30, 2017 $28.78 -1.07% 2,384.20 0.91%
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2021 $23.27 -0.73% 4,567.00 -0.83%
59. Dec 31, 2021 $23.54 1.16% 4,766.18 4.36%
Average (R): 0.46% 1.36%
Standard deviation: 12.92% 4.48%
Warner Bros. Discovery Inc. (WBD) Standard & Poor’s 500 (S&P 500)
t Date PriceWBD,t1 DividendWBD,t1 RWBD,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2017 $28.35 2,278.87
1. Feb 28, 2017 $28.76 1.45% 2,363.64 3.72%
2. Mar 31, 2017 $29.09 1.15% 2,362.72 -0.04%
3. Apr 30, 2017 $28.78 -1.07% 2,384.20 0.91%
4. May 31, 2017 $26.50 -7.92% 2,411.80 1.16%
5. Jun 30, 2017 $25.83 -2.53% 2,423.41 0.48%
6. Jul 31, 2017 $24.60 -4.76% 2,470.30 1.93%
7. Aug 31, 2017 $22.21 -9.72% 2,471.65 0.05%
8. Sep 30, 2017 $21.29 -4.14% 2,519.36 1.93%
9. Oct 31, 2017 $18.88 -11.32% 2,575.26 2.22%
10. Nov 30, 2017 $19.02 0.74% 2,647.58 2.81%
11. Dec 31, 2017 $22.38 17.67% 2,673.61 0.98%
12. Jan 31, 2018 $25.07 12.02% 2,823.81 5.62%
13. Feb 28, 2018 $24.32 -2.99% 2,713.83 -3.89%
14. Mar 31, 2018 $21.43 -11.88% 2,640.87 -2.69%
15. Apr 30, 2018 $23.65 10.36% 2,648.05 0.27%
16. May 31, 2018 $21.09 -10.82% 2,705.27 2.16%
17. Jun 30, 2018 $27.50 30.39% 2,718.37 0.48%
18. Jul 31, 2018 $26.58 -3.35% 2,816.29 3.60%
19. Aug 31, 2018 $27.83 4.70% 2,901.52 3.03%
20. Sep 30, 2018 $32.00 14.98% 2,913.98 0.43%
21. Oct 31, 2018 $32.39 1.22% 2,711.74 -6.94%
22. Nov 30, 2018 $30.72 -5.16% 2,760.17 1.79%
23. Dec 31, 2018 $24.74 -19.47% 2,506.85 -9.18%
24. Jan 31, 2019 $28.38 14.71% 2,704.10 7.87%
25. Feb 28, 2019 $28.90 1.83% 2,784.49 2.97%
26. Mar 31, 2019 $27.02 -6.51% 2,834.40 1.79%
27. Apr 30, 2019 $30.90 14.36% 2,945.83 3.93%
28. May 31, 2019 $27.26 -11.78% 2,752.06 -6.58%
29. Jun 30, 2019 $30.70 12.62% 2,941.76 6.89%
30. Jul 31, 2019 $30.31 -1.27% 2,980.38 1.31%
31. Aug 31, 2019 $27.60 -8.94% 2,926.46 -1.81%
32. Sep 30, 2019 $26.63 -3.51% 2,976.74 1.72%
33. Oct 31, 2019 $26.96 1.24% 3,037.56 2.04%
34. Nov 30, 2019 $32.94 22.18% 3,140.98 3.40%
35. Dec 31, 2019 $32.74 -0.61% 3,230.78 2.86%
36. Jan 31, 2020 $29.26 -10.63% 3,225.52 -0.16%
37. Feb 29, 2020 $25.70 -12.17% 2,954.22 -8.41%
38. Mar 31, 2020 $19.44 -24.36% 2,584.59 -12.51%
39. Apr 30, 2020 $22.42 15.33% 2,912.43 12.68%
40. May 31, 2020 $21.75 -2.99% 3,044.31 4.53%
41. Jun 30, 2020 $21.10 -2.99% 3,100.29 1.84%
42. Jul 31, 2020 $21.10 0.00% 3,271.12 5.51%
43. Aug 31, 2020 $22.07 4.60% 3,500.31 7.01%
44. Sep 30, 2020 $21.77 -1.36% 3,363.00 -3.92%
45. Oct 31, 2020 $20.24 -7.03% 3,269.96 -2.77%
46. Nov 30, 2020 $26.91 32.95% 3,621.63 10.75%
47. Dec 31, 2020 $30.09 11.82% 3,756.07 3.71%
48. Jan 31, 2021 $41.42 37.65% 3,714.24 -1.11%
49. Feb 28, 2021 $53.03 28.03% 3,811.15 2.61%
50. Mar 31, 2021 $43.46 -18.05% 3,972.89 4.24%
51. Apr 30, 2021 $37.66 -13.35% 4,181.17 5.24%
52. May 31, 2021 $32.11 -14.74% 4,204.11 0.55%
53. Jun 30, 2021 $30.68 -4.45% 4,297.50 2.22%
54. Jul 31, 2021 $29.01 -5.44% 4,395.26 2.27%
55. Aug 31, 2021 $28.84 -0.59% 4,522.68 2.90%
56. Sep 30, 2021 $25.38 -12.00% 4,307.54 -4.76%
57. Oct 31, 2021 $23.44 -7.64% 4,605.38 6.91%
58. Nov 30, 2021 $23.27 -0.73% 4,567.00 -0.83%
59. Dec 31, 2021 $23.54 1.16% 4,766.18 4.36%
Average (R): 0.46% 1.36%
Standard deviation: 12.92% 4.48%

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1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of WBD during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t


Variance and Covariance

Warner Bros. Discovery Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RWBD,t RS&P 500,t (RWBD,tRWBD)2 (RS&P 500,tRS&P 500)2 (RWBD,tRWBD)×(RS&P 500,tRS&P 500)
1. Feb 28, 2017 1.45% 3.72% 0.98 5.58 2.34
2. Mar 31, 2017 1.15% -0.04% 0.48 1.95 -0.97
3. Apr 30, 2017 -1.07% 0.91% 2.32 0.20 0.68
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2021 -0.73% -0.83% 1.40 4.80 2.59
59. Dec 31, 2021 1.16% 4.36% 0.50 9.02 2.11
Total (Σ): 9,681.94 1,164.17 1,526.12
t Date RWBD,t RS&P 500,t (RWBD,tRWBD)2 (RS&P 500,tRS&P 500)2 (RWBD,tRWBD)×(RS&P 500,tRS&P 500)
1. Feb 28, 2017 1.45% 3.72% 0.98 5.58 2.34
2. Mar 31, 2017 1.15% -0.04% 0.48 1.95 -0.97
3. Apr 30, 2017 -1.07% 0.91% 2.32 0.20 0.68
4. May 31, 2017 -7.92% 1.16% 70.20 0.04 1.68
5. Jun 30, 2017 -2.53% 0.48% 8.91 0.77 2.62
6. Jul 31, 2017 -4.76% 1.93% 27.23 0.33 -3.01
7. Aug 31, 2017 -9.72% 0.05% 103.47 1.70 13.26
8. Sep 30, 2017 -4.14% 1.93% 21.15 0.33 -2.63
9. Oct 31, 2017 -11.32% 2.22% 138.68 0.74 -10.14
10. Nov 30, 2017 0.74% 2.81% 0.08 2.10 0.41
11. Dec 31, 2017 17.67% 0.98% 296.16 0.14 -6.45
12. Jan 31, 2018 12.02% 5.62% 133.71 18.15 49.26
13. Feb 28, 2018 -2.99% -3.89% 11.89 27.59 18.11
14. Mar 31, 2018 -11.88% -2.69% 152.27 16.37 49.93
15. Apr 30, 2018 10.36% 0.27% 98.07 1.18 -10.75
16. May 31, 2018 -10.82% 2.16% 127.26 0.64 -9.06
17. Jun 30, 2018 30.39% 0.48% 896.23 0.76 -26.15
18. Jul 31, 2018 -3.35% 3.60% 14.45 5.04 -8.53
19. Aug 31, 2018 4.70% 3.03% 18.03 2.78 7.08
20. Sep 30, 2018 14.98% 0.43% 211.05 0.86 -13.49
21. Oct 31, 2018 1.22% -6.94% 0.58 68.86 -6.33
22. Nov 30, 2018 -5.16% 1.79% 31.50 0.18 -2.40
23. Dec 31, 2018 -19.47% -9.18% 396.91 111.00 209.90
24. Jan 31, 2019 14.71% 7.87% 203.25 42.39 92.82
25. Feb 28, 2019 1.83% 2.97% 1.89 2.61 2.22
26. Mar 31, 2019 -6.51% 1.79% 48.46 0.19 -3.02
27. Apr 30, 2019 14.36% 3.93% 193.30 6.62 35.78
28. May 31, 2019 -11.78% -6.58% 149.73 62.97 97.10
29. Jun 30, 2019 12.62% 6.89% 147.93 30.64 67.32
30. Jul 31, 2019 -1.27% 1.31% 2.98 0.00 0.08
31. Aug 31, 2019 -8.94% -1.81% 88.31 10.03 29.76
32. Sep 30, 2019 -3.51% 1.72% 15.77 0.13 -1.43
33. Oct 31, 2019 1.24% 2.04% 0.61 0.47 0.54
34. Nov 30, 2019 22.18% 3.40% 471.96 4.19 44.47
35. Dec 31, 2019 -0.61% 2.86% 1.13 2.25 -1.60
36. Jan 31, 2020 -10.63% -0.16% 122.89 2.31 16.86
37. Feb 29, 2020 -12.17% -8.41% 159.34 95.43 123.32
38. Mar 31, 2020 -24.36% -12.51% 615.75 192.37 344.17
39. Apr 30, 2020 15.33% 12.68% 221.20 128.29 168.46
40. May 31, 2020 -2.99% 4.53% 11.87 10.05 -10.92
41. Jun 30, 2020 -2.99% 1.84% 11.87 0.23 -1.66
42. Jul 31, 2020 0.00% 5.51% 0.21 17.24 -1.90
43. Aug 31, 2020 4.60% 7.01% 17.15 31.91 23.39
44. Sep 30, 2020 -1.36% -3.92% 3.30 27.89 9.59
45. Oct 31, 2020 -7.03% -2.77% 56.02 17.01 30.87
46. Nov 30, 2020 32.95% 10.75% 1,056.13 88.30 305.37
47. Dec 31, 2020 11.82% 3.71% 129.07 5.54 26.75
48. Jan 31, 2021 37.65% -1.11% 1,383.64 6.11 -91.94
49. Feb 28, 2021 28.03% 2.61% 760.30 1.57 34.50
50. Mar 31, 2021 -18.05% 4.24% 342.35 8.33 -53.40
51. Apr 30, 2021 -13.35% 5.24% 190.50 15.09 -53.62
52. May 31, 2021 -14.74% 0.55% 230.84 0.65 12.30
53. Jun 30, 2021 -4.45% 2.22% 24.11 0.75 -4.24
54. Jul 31, 2021 -5.44% 2.27% 34.81 0.84 -5.41
55. Aug 31, 2021 -0.59% 2.90% 1.09 2.38 -1.61
56. Sep 30, 2021 -12.00% -4.76% 155.09 37.39 76.15
57. Oct 31, 2021 -7.64% 6.91% 65.61 30.87 -45.01
58. Nov 30, 2021 -0.73% -0.83% 1.40 4.80 2.59
59. Dec 31, 2021 1.16% 4.36% 0.50 9.02 2.11
Total (Σ): 9,681.94 1,164.17 1,526.12

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VarianceWBD = Σ(RWBD,tRWBD)2 ÷ (59 – 1)
= 9,681.94 ÷ (59 – 1)
= 166.93

VarianceS&P 500 = Σ(RS&P 500,tRS&P 500)2 ÷ (59 – 1)
= 1,164.17 ÷ (59 – 1)
= 20.07

CovarianceWBD, S&P 500 = Σ(RWBD,tRWBD)×(RS&P 500,tRS&P 500) ÷ (59 – 1)
= 1,526.12 ÷ (59 – 1)
= 26.31


Systematic Risk (β) Estimation

Microsoft Excel
VarianceWBD 166.93
VarianceS&P 500 20.07
CovarianceWBD, S&P 500 26.31
Correlation coefficientWBD, S&P 5001 0.45
βWBD2 1.31
αWBD3 -1.32%

Calculations

1 Correlation coefficientWBD, S&P 500
= CovarianceWBD, S&P 500 ÷ (Standard deviationWBD × Standard deviationS&P 500)
= 26.31 ÷ (12.92% × 4.48%)
= 0.45

2 βWBD
= CovarianceWBD, S&P 500 ÷ VarianceS&P 500
= 26.31 ÷ 20.07
= 1.31

3 αWBD
= AverageWBD – βWBD × AverageS&P 500
= 0.46%1.31 × 1.36%
= -1.32%


Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.67%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk (β) of Warner Bros. Discovery Inc. common stock βWBD 1.31
 
Expected rate of return on Warner Bros. Discovery Inc. common stock3 E(RWBD) 16.62%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(RWBD) = RF + βWBD [E(RM) – RF]
= 4.67% + 1.31 [13.79%4.67%]
= 16.62%