Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Warner Bros. Discovery Inc., EBITDA calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial trajectory from 2017 to 2021 is characterized by a significant expansion in operational earnings followed by a period of relative stability in core cash flow, juxtaposed with a gradual compression of bottom-line profitability.
- EBITDA Growth and Stabilization
- A substantial increase in EBITDA is observed between 2017 and 2018, where values rose from 2,578 million to 6,437 million. This growth trend peaked in 2019 at 7,171 million. Despite a slight contraction in 2020, EBITDA recovered to 7,149 million by 2021, indicating a consistent ability to generate strong operational cash flow over the latter four years of the period.
- Operating Income Divergence
- A divergence is noted between EBITDA and Earnings Before Interest and Taxes (EBIT). While EBITDA remained relatively stable after 2019, EBIT peaked at 2,971 million in 2019 and entered a steady decline, falling to 2,066 million by 2021. This suggests an increase in depreciation and amortization expenses relative to total operational earnings.
- Net Profitability Trends
- The transition from a net loss of 337 million in 2017 to a peak net income of 2,069 million in 2019 marks a period of rapid profitability improvement. However, subsequent years show a downward trend in both Earnings Before Tax (EBT) and net income, with the latter decreasing by approximately 51% from its 2019 peak to 1,006 million in 2021.
- Structural Margin Compression
- The gap between EBITDA and net income widened significantly toward the end of the period. In 2019, net income represented approximately 28.8% of EBITDA, whereas by 2021, this ratio decreased to approximately 14.1%, reflecting increased pressure from non-operational costs, taxes, or interest obligations.
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Enterprise Value to EBITDA Ratio, Current
Warner Bros. Discovery Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 37,871) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 7,149) |
| Valuation Ratio | |
| EV/EBITDA | 5.30 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Alphabet Inc. | 22.85 |
| Comcast Corp. | 3.58 |
| Meta Platforms Inc. | 17.67 |
| Netflix Inc. | 9.47 |
| Walt Disney Co. | 11.50 |
| EV/EBITDA, Sector | |
| Media & Entertainment | 29.72 |
| EV/EBITDA, Industry | |
| Communication Services | 20.79 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
Warner Bros. Discovery Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 26,581) | 42,035) | 28,601) | 33,012) | 16,764) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 7,149) | 6,691) | 7,171) | 6,437) | 2,578) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 3.72 | 6.28 | 3.99 | 5.13 | 6.50 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Alphabet Inc. | 18.08 | — | — | — | — | |
| Comcast Corp. | 8.45 | — | — | — | — | |
| Meta Platforms Inc. | 10.85 | — | — | — | — | |
| Netflix Inc. | 9.51 | — | — | — | — | |
| Walt Disney Co. | 34.53 | 60.13 | — | — | — | |
| EV/EBITDA, Sector | ||||||
| Media & Entertainment | 14.62 | — | — | — | — | |
| EV/EBITDA, Industry | ||||||
| Communication Services | 11.57 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/EBITDA = EV ÷ EBITDA
= 26,581 ÷ 7,149 = 3.72
4 Click competitor name to see calculations.
The valuation of the entity between 2017 and 2021 is characterized by significant volatility in enterprise value, contrasted by relatively stable operating performance following an initial growth surge. The resulting EV/EBITDA ratio exhibits a fluctuating trajectory, ultimately reaching a five-year low by the end of the analyzed period.
- Enterprise Value (EV) Volatility
- Enterprise value experienced substantial shifts, beginning at 16,764 million USD in 2017 and peaking at 42,035 million USD in 2020. A sharp increase was observed between 2017 and 2018, followed by a period of instability that culminated in a significant contraction to 26,581 million USD by December 31, 2021.
- EBITDA Stability
- Operational earnings demonstrated a strong initial expansion, rising from 2,578 million USD in 2017 to 6,437 million USD in 2018. From 2018 through 2021, EBITDA remained consistently within a range of approximately 6,400 million USD to 7,200 million USD, indicating that core operational profitability remained steady regardless of the fluctuations in total enterprise value.
- EV/EBITDA Ratio Interpretation
- The EV/EBITDA ratio reflects a general downward trend punctuated by a temporary increase. The ratio declined from 6.50 in 2017 to 3.99 in 2019, spiked to 6.28 in 2020, and subsequently dropped to 3.72 in 2021. Because EBITDA remained relatively flat while the enterprise value decreased in the final year, the resulting multiple suggests a compression in the valuation the market assigned to each dollar of operational earnings.
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