Enterprise Value to FCFF (EV/FCFF)
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Warner Bros. Discovery Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2008
- Price to Book Value (P/BV) since 2008
- Price to Sales (P/S) since 2008
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Free Cash Flow to The Firm (FCFF)
Warner Bros. Discovery Inc., FCFF 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 data indicates the trends in cash flow related to operations and free cash flow over the five-year period ending December 31, 2021.
- Cash Provided by Operating Activities
-
This metric experienced an overall upward trend from 2017 through 2019, increasing from $1,629 million to a peak of $3,399 million. In 2020, there was a noticeable decline to $2,739 million, which was slightly reversed in 2021 with a modest increase to $2,798 million. The data suggest robustness in cash generation from operations during the first three years, followed by a downturn in 2020, potentially impacted by external economic factors, with a partial recovery in the subsequent year.
- Free Cash Flow to the Firm (FCFF)
-
Similarly, FCFF showed strong growth between 2017 and 2019, rising steadily from $1,726 million to $3,790 million. As with operating cash flow, 2020 showed a decline to $2,862 million, but this was followed by a slight improvement in 2021 to $2,983 million. This pattern indicates that while the company was able to generate increasing free cash flow up to 2019, 2020 marked a period of contraction with some recovery by 2021. The relationship between the two cash flow metrics remains consistent over the period, reflecting aligned operational and free cash flow trends.
Overall, both cash flow measures reflect a period of growth up until 2019, followed by a negative impact in 2020, with signs of resilience and gradual recovery in 2021. This suggests that while challenges were encountered in 2020, the company maintained the capacity to generate cash and appears to be on a positive trajectory heading into 2021.
Interest Paid, Net of Tax
Warner Bros. Discovery Inc., interest paid, net of tax calculation
US$ 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).
2 2021 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= × =
The financial data reveals distinct trends in the effective income tax rate and cash paid for interest over the five-year period.
- Effective Income Tax Rate (EITR)
- The effective income tax rate demonstrated a notable volatility across the years analyzed. Starting at 35% in 2017, it decreased slightly to 33% in 2018, followed by a sharp decline to 4% in 2019. Subsequently, the rate increased to 22% in 2020, before decreasing again to 16% in 2021. This fluctuation suggests significant changes in the company's tax structure or tax planning strategies during this timeframe.
- Cash Paid for Interest, Net of Tax (US$ in millions)
- The cash paid for interest exhibited an overall upward trend with some variation. From $232 million in 2017, the amount more than doubled to $496 million in 2018, continuing to increase to $680 million in 2019. However, in 2020, there was a decline to $525 million, followed by a slight increase to $558 million in 2021. This pattern indicates increased interest expenses over the long term, potentially reflecting higher debt levels or rising interest rates, with a temporary reduction in 2020 possibly related to strategic financial decisions or market conditions during that year.
Enterprise Value to FCFF Ratio, Current
Warner Bros. Discovery Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Alphabet Inc. | |
| Comcast Corp. | |
| Meta Platforms Inc. | |
| Netflix Inc. | |
| Take-Two Interactive Software Inc. | |
| Walt Disney Co. | |
| EV/FCFF, Sector | |
| Media & Entertainment | |
| EV/FCFF, Industry | |
| Communication Services | |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Warner Bros. Discovery Inc., historical EV/FCFF 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 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| EV/FCFF, Sector | ||||||
| Media & Entertainment | ||||||
| EV/FCFF, Industry | ||||||
| Communication Services | ||||||
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/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value showed an overall fluctuating trend over the period. It nearly doubled from 16,764 million USD at the end of 2017 to 33,012 million USD in 2018, indicating a significant increase in the company’s valuation. However, in 2019, the EV declined to 28,601 million USD. In 2020, the EV rose sharply again to 42,035 million USD, representing the highest value in the observed timeframe. By the end of 2021, the EV dropped considerably to 26,581 million USD, the lowest since 2018.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm demonstrated a generally positive and upward trajectory from 2017 to 2021. It increased from 1,726 million USD in 2017 to a peak of 3,790 million USD in 2019. Despite a decline in 2020 to 2,862 million USD, FCFF recovered modestly to 2,983 million USD in 2021. Overall, the firm maintained robust free cash flow generation throughout the period.
- EV/FCFF Ratio
- The EV to FCFF ratio exhibited significant volatility. It began at 9.71 in 2017, rising to 11.29 in 2018, suggesting increased valuation relative to cash flow. In 2019, the ratio dropped sharply to 7.55, reflecting a more favorable valuation relative to cash flow generation. However, the ratio spiked to 14.69 in 2020, indicating a divergence where enterprise value increased disproportionately compared to free cash flow. In 2021, the ratio decreased to 8.91, moving closer to earlier levels and signifying a more balanced relationship between enterprise value and free cash flow.