Warner Bros. Discovery Inc., FCFE calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income (loss) available to Discovery, Inc.	1,006)	1,219)	2,069)	594)	(337)
Net income attributable to noncontrolling interests and redeemable noncontrolling interests	191)	136)	144)	87)	24)
Net noncash charges	4,838)	4,483)	4,159)	4,815)	3,837)
Changes in operating assets and liabilities, net of acquisitions and dispositions	(3,237)	(3,099)	(2,973)	(2,920)	(1,895)
Cash provided by operating activities	2,798)	2,739)	3,399)	2,576)	1,629)
Purchases of property and equipment	(373)	(402)	(289)	(147)	(135)
Principal repayments of debt, including premiums to par value and discount payment	(574)	(2,193)	(2,658)	(16)	(650)
Borrowings from debt, net of discount and issuance costs	—)	1,979)	1,479)	—)	7,488)
Principal repayments of revolving credit facility	—)	(500)	(225)	(200)	(475)
Borrowings under revolving credit facility	—)	500)	—)	—)	350)
Borrowings under term loan facilities	—)	—)	—)	2,000)	—)
Principal repayments of term loans	—)	—)	—)	(2,000)	—)
Free cash flow to equity (FCFE)	1,851)	2,123)	1,706)	2,213)	8,207)

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).

Cash provided by operating activities: The cash generated from operating activities exhibited a steady increase from 2017 to 2019, climbing from $1,629 million to $3,399 million. However, in 2020, there was a noticeable decline to $2,739 million, followed by a slight recovery to $2,798 million in 2021. This pattern suggests a growth trend in operational cash generation until 2019, impacted presumably by external factors in 2020, with a modest rebound in the following year.
Free cash flow to equity (FCFE): The FCFE showed considerable variability over the observed period. Starting from a high of $8,207 million in 2017, it sharply declined to $2,213 million in 2018 and continued to decrease to $1,706 million in 2019. In 2020, the FCFE increased to $2,123 million but declined again to $1,851 million in 2021. This fluctuation indicates significant changes in the company's ability to generate free cash flow available to equity holders, with the peak in 2017 and a more constrained cash flow situation in subsequent years.
Overall Trends and Insights: The data reveals that while operating cash flows increased substantially until 2019, free cash flow to equity did not follow the same upward trajectory and instead declined sharply after 2017. The decline in FCFE suggests potential increases in capital expenditures, debt repayments, or other financing activities that reduced the equity cash flow despite solid operating cash generation. The dip in operating cash flow in 2020 likely reflects external pressures, with only partial recovery by 2021. The discrepancy between operating cash flow and FCFE trends points to changes in financing or investment strategies that should be further investigated for a comprehensive financial analysis.

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Warner Bros. Discovery Inc., current P/FCFE calculation, comparison to benchmarks

No. shares of common stock outstanding	2,428,396,015
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in millions)	1,851)
FCFE per share	0.76
Current share price (P)	10.43
Valuation Ratio
P/FCFE	13.68
Benchmarks
P/FCFE, Competitors¹
Alphabet Inc.	29.44
Comcast Corp.	8.68
Meta Platforms Inc.	29.24
Netflix Inc.	64.01
Take-Two Interactive Software Inc.	112.66
Walt Disney Co.	30.53
P/FCFE, Sector
Media & Entertainment	44.37
P/FCFE, Industry
Communication Services	38.28

Based on: 10-K (reporting date: 2021-12-31).

¹ Click competitor name to see calculations.

If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

Warner Bros. Discovery Inc., historical P/FCFE calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
No. shares of common stock outstanding¹	506,245,821	487,334,195	520,922,321	523,978,060	381,907,924
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in millions)²	1,851)	2,123)	1,706)	2,213)	8,207)
FCFE per share³	3.66	4.36	3.27	4.22	21.49
Share price^1, 4	27.73	55.29	24.67	29.08	24.32
Valuation Ratio
P/FCFE⁵	7.58	12.69	7.53	6.89	1.13
Benchmarks
P/FCFE, Competitors⁶
Alphabet Inc.	29.75	26.58	—	—	—
Comcast Corp.	27.57	18.17	—	—	—
Meta Platforms Inc.	16.84	32.77	—	—	—
Netflix Inc.	—	81.38	—	—	—
Take-Two Interactive Software Inc.	24.59	25.32	—	—	—
Walt Disney Co.	—	18.20	55.35	—	—
P/FCFE, Sector
Media & Entertainment	29.73	27.23	—	—	—
P/FCFE, Industry
Communication Services	26.51	20.53	—	—	—

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).

¹ Data adjusted for splits and stock dividends.

² See details »

³ 2021 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,851,000,000 ÷ 506,245,821 = 3.66

⁴ Closing price as at the filing date of Warner Bros. Discovery Inc. Annual Report.

⁵ 2021 Calculation
P/FCFE = Share price ÷ FCFE per share
= 27.73 ÷ 3.66 = 7.58

⁶ Click competitor name to see calculations.

Share Price: The share price exhibited fluctuations over the period analyzed. It increased from $24.32 at the end of 2017 to a peak of $55.29 at the end of 2020, representing significant growth. However, the price declined sharply in 2021 to $27.73, nearly halving from the previous year's high.
Free Cash Flow to Equity (FCFE) per Share: The FCFE per share showed a declining trend overall. It started at a high of $21.49 in 2017 but dropped dramatically to $4.22 in 2018. From 2018 onwards, the FCFE per share remained relatively low and stable, fluctuating slightly between $3.27 and $4.36 but never approaching the 2017 level.
Price to FCFE (P/FCFE) Ratio: The P/FCFE ratio exhibited an increasing trend from 2017 through 2020, moving from a low of 1.13 to a peak of 12.69 in 2020. This suggests that the market valuation relative to free cash flow per share increased substantially over this period. In 2021, the ratio fell to 7.58, indicating some market recalibration but remaining significantly higher than in the initial years.
Overall Analysis: The share price and the P/FCFE ratio generally trended upwards until 2020, reflecting rising market optimism or valuation expansion despite the decline in FCFE per share. The divergence between the declining FCFE per share and rising share price suggests that factors other than free cash flow were influencing valuations. The sharp decline in the share price in 2021, alongside a decrease in the P/FCFE ratio, points to a reassessment of valuation, potentially in response to the low free cash flow generation. The persistently low FCFE per share after 2017 indicates challenges in generating shareholder cash flow despite volatile market valuations.

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Warner Bros. Discovery Inc. (NASDAQ:WBD)

Price to FCFE (P/FCFE)

Free Cash Flow to Equity (FCFE)

Price to FCFE Ratio, Current

Price to FCFE Ratio, Historical