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 3,5764,0054,4754,4635,3015,860.796,479.707,163.967,920.488,756.89
Revenue (%)
Operating Cash Flow 535425400463638667.20737.66815.56901.68996.90
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 49135129633864444.13491.03542.88600.21663.59

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 3,5764,0054,4754,4635,3015,860.796,479.707,163.967,920.488,756.89
Operating Cash Flow 535425400463638667.20737.66815.56901.68996.90
Capital Expenditure -44-74-104-125-574-223.07-246.63-272.68-301.47-333.31
Free Cash Flow 49135129633864444.13491.03542.88600.21663.59
WACC
PV LFCF 410.62419.73429.05438.57448.30
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