DCF Tool

WMG

with its broad roster of new stars and legendary artists, warner music group is home to a collection of the best-known record labels in the music industry including asylum, atlantic, east west, elektra, fueled by ramen, nonesuch, reprise, rhino, roadrunner, rykodisc, sire, warner bros. and word, as well as warner/chappell music, one of the world's leading music publishers, with a catalog of more than one million copyrights worldwide. wmg comprises an array of businesses aimed at helping artists achieve long-term creative and financial success while providing consumers with the highest-quality music content available. wmg is engaged in the recorded music business (including artist services) and the music publishing business, and is a leading company in national and international repertoire that operates through numerous international affiliates and licensees in more than 50 countries.
Analysis Results
Intrinsic Value $916.84
Latest Price $34.97
Relative Value 96% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 51.2%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 5.5%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 51.2%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2024 1.06 1.0
2025 1.6 1.44
2026 2.42 2.06
2027 3.66 2.96
2028 5.53 4.24
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 162 billion. This corresponds to a present value of 117 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 11.7 billion. Adding in the terminal value gives a total present value of 129 billion.

There are presently 141.0 million outstanding shares, so the intrinsic value per share is 916.84.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 2,402,000,000
Current Cash 641,000,000
Current Liabilities 3,539,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) -1,778,000,000
Change in NCWC 35,000,000
EBIT 789,000,000
Tax Provision 170,000,000
Depreciation and Amortization 332,000,000
Capital Expenditure -241,000,000
Unlevered Free Cash Flow 694,753,694
Current Assets 2,139,000,000
Current Cash 584,000,000
Current Liabilities 3,368,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) -1,813,000,000
Change in NCWC -60,000,000
EBIT 714,000,000
Tax Provision 185,000,000
Depreciation and Amortization 339,000,000
Capital Expenditure -326,000,000
Unlevered Free Cash Flow 488,500,000
Current Assets 1,896,000,000
Current Cash 499,000,000
Current Liabilities 3,150,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) -1,753,000,000
Change in NCWC -158,000,000
EBIT 609,000,000
Tax Provision 149,000,000
Depreciation and Amortization 306,000,000
Capital Expenditure -574,000,000
Unlevered Free Cash Flow -15,993,421
Current Assets 1,678,000,000
Current Cash 553,000,000
Current Liabilities 2,720,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) -1,595,000,000
Change in NCWC 152,000,000
EBIT -229,000,000
Tax Provision 23,000,000
Depreciation and Amortization 261,000,000
Capital Expenditure -125,000,000
Unlevered Free Cash Flow 59,000,000
Current Assets 1,691,000,000
Current Cash 619,000,000
Current Liabilities 2,819,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) -1,747,000,000
Change in NCWC -36,000,000
EBIT 356,000,000
Tax Provision 9,000,000
Depreciation and Amortization 269,000,000
Capital Expenditure -145,000,000
Unlevered Free Cash Flow 432,000,000

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