Discounted Cash Flow (DCF) Analysis Unlevered

Warner Music Group Corp. (WMG)

$33.75

-0.59 (-1.72%)
All numbers are in Millions, Currency in USD
Stock DCF: 14.41 | 33.75 | overvalue

Operating Data

Year
A/P
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Actual
2023
Projected
2024
Projected
2025
Projected
2026
Projected
2027
Projected
Revenue 4,0054,4754,4635,3015,9196,539.047,224.047,980.798,816.829,740.43
Revenue (%)
EBITDA 836676-648811,200934.291,032.161,140.281,259.731,391.70
EBITDA (%)
EBIT 575407-325575861543.57600.51663.42732.91809.69
EBIT (%)
Depreciation 261269261306339390.72431.65476.87526.82582.01
Depreciation (%)

Balance Sheet Data

Year
A/P
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Actual
2023
Projected
2024
Projected
2025
Projected
2026
Projected
2027
Projected
Total Cash 514619553499584762.94842.86931.151,028.691,136.45
Total Cash (%)
Account Receivables 4477757718399841,022.791,129.931,248.301,379.071,523.53
Account Receivables (%)
Inventories 42747999108106.78117.96130.32143.97159.05
Inventories (%)
Accounts Payable 281260264302268378.83418.51462.35510.78564.29
Accounts Payable (%)
Capital Expenditure -88-145-125-574-135-279.18-308.43-340.74-376.43-415.86
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 33.75
Beta 1.676
Diluted Shares Outstanding 381.05
Cost of Debt
Tax Rate 25.54
After-tax Cost of Debt 2.32%
Risk-Free Rate
Market Risk Premium
Cost of Equity 11.509
Total Debt 4,013
Total Equity 12,860.31
Total Capital 16,873.31
Debt Weighting 23.78
Equity Weighting 76.22
Wacc

Build Up Free Cash

Year
A/P
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Actual
2023
Projected
2024
Projected
2025
Projected
2026
Projected
2027
Projected
Revenue 4,0054,4754,4635,3015,9196,539.047,224.047,980.798,816.829,740.43
EBITDA 836676-648811,200934.291,032.161,140.281,259.731,391.70
EBIT 575407-325575861543.57600.51663.42732.91809.69
Tax Rate 30.54%4.12%-6.26%33.33%25.54%17.45%17.45%17.45%17.45%17.45%
EBIAT 399.38390.23-345.36383.33641.10448.69495.69547.62604.99668.36
Depreciation 261269261306339390.72431.65476.87526.82582.01
Accounts Receivable --3284-68-145-38.79-107.14-118.37-130.77-144.46
Inventories --32-5-20-91.22-11.19-12.36-13.65-15.08
Accounts Payable --21438-34110.8339.6843.8448.4353.51
Capital Expenditure -88-145-125-574-135-279.18-308.43-340.74-376.43-415.86
UFCF 572.38133.23-206.3665.33657.10633.49540.27596.87659.39728.47
WACC
PV UFCF 579.48452.08456.86461.69466.57
SUM PV UFCF 2,416.67

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 9.32
Free cash flow (t + 1) 743.04
Terminal Value 10,150.80
Present Value of Terminal Value 6,501.33

Intrinsic Value

Enterprise Value 8,918
Net Debt 3,429
Equity Value 5,489
Shares Outstanding 381.05
Equity Value Per Share 14.41