Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Warner Bros. Discovery Inc., profitability ratios
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).
- Gross Profit Margin
- The gross profit margin demonstrated an overall positive trend from 2017 to 2019, increasing from 61.36% to 65.73%. However, this margin experienced a decline in the subsequent years, decreasing to 63.83% in 2020 and further to 62.1% in 2021, suggesting some erosion in direct profitability after peaking in 2019.
- Operating Profit Margin
- This margin showed a significant improvement between 2017 and 2019, rising sharply from 10.37% to 27%. The increase reflects enhanced operational efficiency or improved cost management during this period. However, there was a notable decline afterward, with the margin dropping to 23.57% in 2020 and further to 16.5% in 2021, indicating challenges in maintaining operational profitability.
- Net Profit Margin
- The net profit margin started in negative territory in 2017 at -4.9%, reflecting a loss. It turned positive in 2018 at 5.63%, followed by a substantial increase to 18.57% in 2019. Post-2019, profitability diminished, with margins falling to 11.42% in 2020 and 8.25% in 2021. Despite this decline, net profitability remained positive, signaling that the company managed to sustain earnings beyond operating income.
- Return on Equity (ROE)
- The ROE mirrored net profit margin trends. Initially negative at -7.31% in 2017, it rose to a strong 20.92% by 2019, indicating effective use of shareholder equity to generate profits in that year. The following years saw a reduction to 11.65% in 2020 and 8.67% in 2021, consistent with declining net income and operating margins, but still maintaining a positive return for equity holders.
- Return on Assets (ROA)
- ROA figures showed a gradual improvement from -1.49% in 2017 to 6.13% in 2019, highlighting increasing efficiency in using assets to generate profits. From 2020 onward, ROA declined to 3.58% in 2020 and 2.92% in 2021, indicating a reduced effectiveness of asset deployment in generating income, corresponding to the decreases in both profit margins and ROE during this period.
Return on Sales
Return on Investment
Gross Profit Margin
Warner Bros. Discovery Inc., gross profit margin 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) | ||||||
| Gross profit | 7,571) | 6,811) | 7,325) | 6,618) | 4,217) | |
| Revenues | 12,191) | 10,671) | 11,144) | 10,553) | 6,873) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 62.10% | 63.83% | 65.73% | 62.71% | 61.36% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 56.94% | 53.58% | — | — | — | |
| Comcast Corp. | 66.96% | 68.02% | — | — | — | |
| Meta Platforms Inc. | 80.79% | 80.58% | — | — | — | |
| Netflix Inc. | 41.64% | 38.89% | — | — | — | |
| Walt Disney Co. | 33.06% | 32.89% | 39.60% | — | — | |
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 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 7,571 ÷ 12,191 = 62.10%
2 Click competitor name to see calculations.
The financial data exhibits a general growth trend in revenues and gross profit over the five-year period ending December 31, 2021. Revenues increased from $6,873 million in 2017 to $12,191 million in 2021, representing a substantial rise that indicates expanding business operations or market demand.
Gross profit also showed a positive trajectory, rising from $4,217 million in 2017 to $7,571 million in 2021. This growth, while substantial, is somewhat moderated relative to revenue growth, suggesting changes in cost structure or pricing strategies affecting overall profitability.
The gross profit margin fluctuated within a narrow band during these years. It started at 61.36% in 2017, increased to a peak of 65.73% in 2019, then decreased to 62.1% by 2021. This margin behavior indicates that, although the company was able to improve profitability efficiency up to 2019, some pressure on costs or competitive pricing emerged thereafter, slightly compressing profitability margins.
- Revenues
- Demonstrated steady growth, more than doubling over the analyzed period, highlighting expanding sales and market presence.
- Gross Profit
- Increased significantly in absolute terms, reflecting the revenue growth and effective cost control up to a certain extent.
- Gross Profit Margin
- Experienced a moderate increase followed by a small decline, suggesting variable cost efficiency and competitive dynamics in recent years.
Operating Profit Margin
Warner Bros. Discovery Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 2,012) | 2,515) | 3,009) | 1,934) | 713) | |
| Revenues | 12,191) | 10,671) | 11,144) | 10,553) | 6,873) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 16.50% | 23.57% | 27.00% | 18.33% | 10.37% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 30.55% | 22.59% | — | — | — | |
| Comcast Corp. | 17.89% | 16.89% | — | — | — | |
| Meta Platforms Inc. | 39.65% | 38.01% | — | — | — | |
| Netflix Inc. | 20.86% | 18.34% | — | — | — | |
| Walt Disney Co. | 4.46% | -2.97% | 15.33% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Media & Entertainment | 26.39% | 20.33% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Communication Services | 22.45% | 16.35% | — | — | — | |
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 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 2,012 ÷ 12,191 = 16.50%
2 Click competitor name to see calculations.
The data reflects the financial performance over five consecutive years, focusing on operating income, revenues, and operating profit margin.
- Operating Income
- Operating income demonstrated a significant increase from 2017 to 2019, rising from 713 million US dollars to 3,009 million US dollars. This peak in 2019 was followed by a decline in the two subsequent years, reaching 2,012 million US dollars by the end of 2021. Despite the decrease post-2019, the operating income at the end of 2021 remains substantially higher than in 2017.
- Revenues
- Revenues showed a general upward trend over the period. The amount nearly doubled from 6,873 million US dollars in 2017 to 12,191 million US dollars in 2021. There was a continuous increase from 2017 to 2019, followed by a slight dip in 2020, and then a rebound with a notable rise in 2021 surpassing previous years' levels.
- Operating Profit Margin
- The operating profit margin exhibited a remarkable increase from 10.37% in 2017 to a peak of 27% in 2019, mirroring the trend in operating income. Subsequently, the margin declined to 16.5% by the end of 2021, indicating a decrease in profitability relative to revenue despite the increase in total revenues reported in that year. The peak margin in 2019 suggests a period of heightened operational efficiency or cost control which was not sustained in the following years.
Overall, the analysis reveals robust growth in both revenues and operating income until 2019, after which there was a reversal in operating income and profit margin despite revenues continuing to grow by 2021. This suggests challenges in maintaining profitability percentages in more recent periods, warranting attention to cost management or operational strategies moving forward.
Net Profit Margin
Warner Bros. Discovery Inc., net profit margin 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) | ||||||
| Net income (loss) available to Discovery, Inc. | 1,006) | 1,219) | 2,069) | 594) | (337) | |
| Revenues | 12,191) | 10,671) | 11,144) | 10,553) | 6,873) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 8.25% | 11.42% | 18.57% | 5.63% | -4.90% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 29.51% | 22.06% | — | — | — | |
| Comcast Corp. | 12.17% | 10.17% | — | — | — | |
| Meta Platforms Inc. | 33.38% | 33.90% | — | — | — | |
| Netflix Inc. | 17.23% | 11.05% | — | — | — | |
| Walt Disney Co. | 2.96% | -4.38% | 15.89% | — | — | |
| Net Profit Margin, Sector | ||||||
| Media & Entertainment | 23.20% | 17.27% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Communication Services | 18.71% | 11.50% | — | — | — | |
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 2021 Calculation
Net profit margin = 100 × Net income (loss) available to Discovery, Inc. ÷ Revenues
= 100 × 1,006 ÷ 12,191 = 8.25%
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in profitability and revenue over the five-year period studied.
- Net Income (Loss)
- Initially, there was a significant net loss in 2017, amounting to -$337 million. This trend reversed sharply in 2018, with net income rising to $594 million. The upward trajectory continued in 2019, peaking at $2,069 million. However, the following years saw a decline in net income, falling to $1,219 million in 2020 and further to $1,006 million in 2021, indicating reduced profitability after the peak year.
- Revenues
- Revenues demonstrated consistent growth overall, starting at $6,873 million in 2017 and increasing substantially to $12,191 million in 2021. Although there was a minor decrease from 2019 ($11,144 million) to 2020 ($10,671 million), this was followed by a return to growth in 2021.
- Net Profit Margin
- The net profit margin mirrored the net income trend. It shifted from a negative margin of -4.9% in 2017 to a positive margin of 5.63% in 2018. The margin then significantly improved in 2019 to 18.57%, representing the most efficient profitability year in the period. However, the margin declined in subsequent years to 11.42% in 2020 and further to 8.25% in 2021, showing diminishing profitability relative to revenues despite continued growth.
Overall, the data illustrates a transition from losses to solid profitability and revenue growth over the initial years, followed by a decline in profit margins and net income despite sustained revenue expansion towards the end of the period. This pattern suggests challenges in maintaining profit efficiency while increasing scale or potential impacts from market or operational factors in the later years.
Return on Equity (ROE)
Warner Bros. Discovery Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) available to Discovery, Inc. | 1,006) | 1,219) | 2,069) | 594) | (337) | |
| Total Discovery, Inc. stockholders’ equity | 11,599) | 10,464) | 9,891) | 8,386) | 4,610) | |
| Profitability Ratio | ||||||
| ROE1 | 8.67% | 11.65% | 20.92% | 7.08% | -7.31% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Alphabet Inc. | 30.22% | 18.09% | — | — | — | |
| Comcast Corp. | 14.73% | 11.66% | — | — | — | |
| Meta Platforms Inc. | 31.53% | 22.72% | — | — | — | |
| Netflix Inc. | 32.28% | 24.96% | — | — | — | |
| Walt Disney Co. | 2.25% | -3.43% | 12.44% | — | — | |
| ROE, Sector | ||||||
| Media & Entertainment | 23.69% | 14.90% | — | — | — | |
| ROE, Industry | ||||||
| Communication Services | 20.34% | 11.50% | — | — | — | |
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 2021 Calculation
ROE = 100 × Net income (loss) available to Discovery, Inc. ÷ Total Discovery, Inc. stockholders’ equity
= 100 × 1,006 ÷ 11,599 = 8.67%
2 Click competitor name to see calculations.
The financial data reveals several key trends over the five-year period ending December 31, 2021.
- Net Income (Loss) Available to Discovery, Inc.
- The net income experienced a significant shift from a loss of $337 million in 2017 to consistent profitability in subsequent years. The company reported a substantial increase to $594 million in 2018, followed by a peak of $2,069 million in 2019. Although net income declined thereafter, it remained positive, with $1,219 million in 2020 and $1,006 million in 2021, indicating sustained profitability but with a downward trend after 2019.
- Total Discovery, Inc. Stockholders’ Equity
- Stockholders’ equity showed a steady upward trend throughout the period. It more than doubled from $4,610 million in 2017 to $8,386 million in 2018, followed by continued growth to $9,891 million in 2019. The equity base expanded further to $10,464 million in 2020 and reached $11,599 million in 2021, reflecting ongoing capital retention and possibly reinvestment of earnings or equity financing.
- Return on Equity (ROE)
- The return on equity shifted from a negative -7.31% in 2017 to positive territory in 2018 at 7.08%. The ROE peaked at 20.92% in 2019, corresponding to the peak in net income that year, before declining to 11.65% in 2020 and further to 8.67% in 2021. This declining trend in ROE suggests diminishing profitability relative to equity, despite overall equity growth.
In summary, the company recovered from a net loss in 2017 to achieve strong profitability in the following years, with a peak in 2019. Equity consistently increased, supporting financial stability. However, both net income and ROE have demonstrated a decreasing trajectory since their peak in 2019, which may warrant further investigation into profitability drivers and operational efficiency.
Return on Assets (ROA)
Warner Bros. Discovery Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) available to Discovery, Inc. | 1,006) | 1,219) | 2,069) | 594) | (337) | |
| Total assets | 34,427) | 34,087) | 33,735) | 32,550) | 22,555) | |
| Profitability Ratio | ||||||
| ROA1 | 2.92% | 3.58% | 6.13% | 1.82% | -1.49% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Alphabet Inc. | 21.16% | 12.60% | — | — | — | |
| Comcast Corp. | 5.13% | 3.85% | — | — | — | |
| Meta Platforms Inc. | 23.72% | 18.29% | — | — | — | |
| Netflix Inc. | 11.48% | 7.03% | — | — | — | |
| Walt Disney Co. | 0.98% | -1.42% | 5.70% | — | — | |
| ROA, Sector | ||||||
| Media & Entertainment | 13.02% | 8.04% | — | — | — | |
| ROA, Industry | ||||||
| Communication Services | 8.36% | 4.69% | — | — | — | |
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 2021 Calculation
ROA = 100 × Net income (loss) available to Discovery, Inc. ÷ Total assets
= 100 × 1,006 ÷ 34,427 = 2.92%
2 Click competitor name to see calculations.
- Net Income (Loss) Trends
- The net income available to the company demonstrated significant fluctuations over the five-year period. In 2017, the company experienced a substantial loss of $337 million. However, this was followed by a recovery in 2018, with a net income of $594 million. The upward trajectory continued sharply in 2019, reaching a peak of $2,069 million. After 2019, net income showed a declining trend, dropping to $1,219 million in 2020 and further decreasing to $1,006 million in 2021. Despite the decline in the last two years, net income remained positive and significantly higher than the initial years.
- Total Assets Trends
- Total assets steadily increased throughout the entire period, starting at $22,555 million in 2017 and growing to $34,427 million by 2021. The asset base experienced its most significant growth between 2017 and 2018, increasing by nearly $10,000 million. Thereafter, the growth rate moderated but still exhibited a consistent upward trend year over year. This indicates a continuous expansion of the company’s asset base over time.
- Return on Assets (ROA) Trends
- Return on assets mirrored the fluctuations in net income but showed a smoother transition. In 2017, the company had a negative ROA of -1.49%, reflecting the net loss that year. The ROA turned positive in 2018 at 1.82% and peaked at 6.13% in 2019, indicating improved profitability relative to its asset base. Following 2019, ROA declined to 3.58% in 2020 and further to 2.92% in 2021, suggesting that profitability relative to assets decreased but remained above earlier year levels.
- Overall Insights
- The company showed a strong recovery and growth phase from 2017 to 2019, with significant improvements in net income and return on assets, accompanied by an expanding asset base. However, the subsequent period from 2019 to 2021 was marked by a decline in profitability metrics, despite continued asset growth. This suggests that while the company continued to invest in and grow its assets, its efficiency in generating profits from those assets diminished in the later years examined. The consistent asset growth indicates ongoing expansion or investment activities, but caution may be warranted due to the declining return on assets.