Discounted Cash Flow (DCF) Analysis Levered

Warner Music Group Corp. (WMG)

$31.5

-0.41 (-1.28%)

All numbers are in Millions, Currency in USD

Stock DCF: 12.20 | 31.5 | overvalue

Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	3,576	4,005	4,475	4,463	5,301	5,860.79	6,479.70	7,163.96	7,920.48	8,756.89
Revenue (%)
Operating Cash Flow	535	425	400	463	638	667.20	737.66	815.56	901.68	996.90
Operating Cash Flow (%)
Capital Expenditure	-44	-74	-104	-125	-574	-223.07	-246.63	-272.68	-301.47	-333.31
Capital Expenditure (%)
Free Cash Flow	491	351	296	338	64	444.13	491.03	542.88	600.21	663.59

Weighted Average Cost Of Capital

Share price	$ 31.5
Beta	1.408
Diluted Shares Outstanding	524.14
Cost of Debt
Tax Rate	33.33
After-tax Cost of Debt	2.21%
Risk-Free Rate
Market Risk Premium
Cost of Equity	9.486
Total Debt	3,676
Total Equity	16,510.34
Total Capital	20,186.34
Debt Weighting	18.21
Equity Weighting	81.79
Wacc

Build Up Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	3,576	4,005	4,475	4,463	5,301	5,860.79	6,479.70	7,163.96	7,920.48	8,756.89
Operating Cash Flow	535	425	400	463	638	667.20	737.66	815.56	901.68	996.90
Capital Expenditure	-44	-74	-104	-125	-574	-223.07	-246.63	-272.68	-301.47	-333.31
Free Cash Flow	491	351	296	338	64	444.13	491.03	542.88	600.21	663.59
WACC
PV LFCF						410.62	419.73	429.05	438.57	448.30
SUM PV LFCF										2,146.27

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	8.16
Free cash flow (t + 1)	676.86
Terminal Value	10,988.05
Present Value of Terminal Value	7,423.13

Intrinsic Value

Enterprise Value	9,569.40
Net Debt	3,177
Equity Value	6,392.40
Shares Outstanding	524.14
Equity Value Per Share	12.20