Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Warner Bros. Discovery Inc., FCFE 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 analysis of cash flow metrics from 2017 to 2021 reveals a period of significant volatility and a notable divergence between operational performance and free cash flow available to equity holders.
- Cash Provided by Operating Activities
- A growth trend is observed from 2017 through 2019, with cash provided by operating activities increasing from 1,629 million US$ to a peak of 3,399 million US$. This upward trajectory was interrupted in 2020, where a decline to 2,739 million US$ occurred, followed by a period of relative stabilization in 2021 at 2,798 million US$.
- Free Cash Flow to Equity (FCFE)
- FCFE exhibits extreme volatility, beginning with a significant peak of 8,207 million US$ in 2017. This was followed by a sharp contraction in 2018 to 2,213 million US$ and a further decline to 1,706 million US$ in 2019. From 2020 to 2021, the metric fluctuated within a narrower range, recording 2,123 million US$ and 1,851 million US$, respectively.
- Comparative Analysis of CFO and FCFE
- A critical disparity is evident in 2017, where FCFE substantially exceeded cash provided by operating activities, suggesting a significant influx of cash from non-operational sources, such as new debt issuance or asset divestitures. Conversely, from 2018 through 2021, FCFE remained consistently lower than operating cash flow. This shift indicates that capital expenditures and net debt repayments began to consume a larger portion of the cash generated from operations, limiting the residual cash available to equity shareholders.
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Price to FCFE Ratio, Current
Warner Bros. Discovery Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 2,428,396,015 |
| Selected Financial Data (US$) | |
| 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. | 32.86 |
| Comcast Corp. | 5.21 |
| Meta Platforms Inc. | 21.05 |
| Netflix Inc. | 35.29 |
| Walt Disney Co. | 31.35 |
| P/FCFE, Sector | |
| Media & Entertainment | 50.60 |
| P/FCFE, Industry | |
| Communication Services | 42.12 |
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.
Price to FCFE Ratio, Historical
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$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,851) | 2,123) | 1,706) | 2,213) | 8,207) | |
| FCFE per share3 | 3.66 | 4.36 | 3.27 | 4.22 | 21.49 | |
| Share price1, 4 | 27.73 | 55.29 | 24.67 | 29.08 | 24.32 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 7.58 | 12.69 | 7.53 | 6.89 | 1.13 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Alphabet Inc. | 29.75 | — | — | — | — | |
| Comcast Corp. | 27.57 | — | — | — | — | |
| Meta Platforms Inc. | 16.84 | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | 18.20 | — | — | — | |
| P/FCFE, Sector | ||||||
| Media & Entertainment | 29.77 | — | — | — | — | |
| P/FCFE, Industry | ||||||
| Communication Services | 26.52 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
3 2021 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,851,000,000 ÷ 506,245,821 = 3.66
4 Closing price as at the filing date of Warner Bros. Discovery Inc. Annual Report.
5 2021 Calculation
P/FCFE = Share price ÷ FCFE per share
= 27.73 ÷ 3.66 = 7.58
6 Click competitor name to see calculations.
A significant expansion of the Price to Free Cash Flow to Equity (P/FCFE) ratio is observed between 2017 and 2020, followed by a contraction in 2021. The valuation multiple transitioned from a low of 1.13 in 2017 to a peak of 12.69 in 2020, indicating a substantial shift in how the market priced the company's equity cash flows relative to its share price.
- FCFE per Share Trends
- A sharp decline in FCFE per share occurred between 2017 and 2018, dropping from US$ 21.49 to US$ 4.22. Following this initial decrease, the FCFE per share exhibited relative stability, fluctuating within a narrow range between US$ 3.27 and US$ 4.36 from 2019 through 2021.
- Share Price Volatility
- The share price remained relatively stable between 2017 and 2019, ranging from US$ 24.32 to US$ 29.08. A significant anomaly occurred in 2020, where the price surged to US$ 55.29, before returning to US$ 27.73 in 2021.
- P/FCFE Ratio Interpretation
- The increase in the P/FCFE ratio from 1.13 in 2017 to 7.53 in 2019 was primarily driven by the collapse in FCFE per share. The subsequent spike to 12.69 in 2020 was attributable to the doubling of the share price while cash flows remained stagnant. The ratio's decline to 7.58 in 2021 reflects a market correction in the share price, bringing the valuation multiple back in line with the levels observed in 2018 and 2019.
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