Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Warner Bros. Discovery, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.3% to 1.9% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 65, DPO 22, DIO 60). At a 7.1% WACC with mid-year discounting, the terminal value (80% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $17.21 per share, suggesting WBD is overvalued by 36.7% at the current price of $27.18.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 3,861 | 3,915 | 3,965 | 4,019 | 4,093 | 4,196 |
| (−) Net Interest | 1,988 | 2,016 | 2,042 | 2,070 | 2,108 | 2,161 |
| (+) D&A | 971 | 1,119 | 1,147 | 1,113 | 1,155 | 1,184 |
| EBITDA | 6,820 | 7,050 | 7,155 | 7,202 | 7,357 | 7,541 |
| (−) Tax | 1,366 | 1,385 | 1,403 | 1,422 | 1,448 | — |
| (−) CapEx | 1,113 | 1,129 | 1,144 | 1,159 | 1,180 | — |
| (−) ΔWC | 4,708 | 124 | 117 | 124 | 171 | — |
| Free Cash Flow (FCF) | -367 | 4,412 | 4,491 | 4,497 | 4,556 | — |
| Peers' EBITDA Multiple | 10.7x | |||||
| Terminal Value | 80,835 | |||||
| WACC / Discount Rate | 7.14% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -355 | 3,978 | 3,780 | 3,533 | 3,341 | 57,267 |
| Enterprise Value | 71,545 | |||||
| Projection Period | 14,278 | 20.0% | ||||
| Terminal Value | 57,267 | 80.0% | ||||
| (−) Current Net Debt | 28,001 | |||||
| Equity Value | 43,544 | |||||
| (÷) Outstanding Shares | 2530M | |||||
| Fair Price | $17 | -36.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.7x | 8.7x | 10.7x | 12.7x | 14.7x |
|---|---|---|---|---|---|
| 5.1% | $10 | $15 | $20 | $24 | $29 |
| 6.1% | $10 | $14 | $18 | $23 | $27 |
| 7.1% | $9 | $13 | $17 | $21 | $26 |
| 8.1% | $8 | $12 | $16 | $20 | $24 |
| 9.1% | $7 | $11 | $15 | $19 | $23 |
Current price: $27.18. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.