Warner Bros. Discovery WBD shares have dipped 16.7% year to date, underperforming the broader Zacks Consumer Discretionary sector’s return of 10.9%.
WBD shares have also lagged the Zacks Broadcast Radio and Television industry’s growth of 44.3% and its peers Netflix NFLX, Fox FOXA and Townsquare Media TSQ. Over the same time frame, shares of NFLX and FOXA have gained 79.1% and 54.2%, respectively, while shares of Townsquare fell 6.2%.
During the nine months ended Sept. 30, 2024, WBD revenues fell 6% year over year to $29.29 billion due to the sluggish performance of the Studio segment. Theatrical and Games revenues decreased for the said period due to overall lower box office revenues.
Warner Bros. Discovery is suffering from the sluggish performance of its Advertising segment due to a fall in the audience in domestic general entertainment and news networks and soft linear advertising markets in the United States, and to a lesser extent, certain international markets, as well as exiting the AT&T SportsNet business.
However, the increasing international and domestic clientele, expanding portfolio offering and growing partner base bodes well for investors.
Warner Bros. Discovery, Inc. Price and Consensus
Warner Bros. Discovery, Inc. price-consensus-chart | Warner Bros. Discovery, Inc. Quote
WBD Benefits From Expanding Partner Base
Warner Bros. Discovery is benefiting from an expanding partner base that includes the likes of the National Basketball Association (NBA) and Charter Communications.
Warner Bros. Discovery recently announced an extended 11-year partnership with the NBA to win the league’s broadcasting rights and has resolved disputes regarding NBA media agreements.
The partnership aims to promote NBA content and drive international growth of TNT sports and digital brands like Bleacher Report and House of Highlights. WBD has received a portfolio of live game rights in several territories internationally, enabling it to enhance its market reach.
Warner Bros. Discovery partnered with Charter Communication, the largest distributor of pay-TV in the United States, to ink a strategic distribution agreement to provide 57 million Charter customers free access to WBD’s Max and Discovery+ streaming platforms.
Further, Charter signed a deal with WBD to increase its overall fee for broadcasting Warner Channels.
WBD’s 2024 Earnings Estimates Not So Bright
For 2024, the Zacks Consensus Estimate for revenues is pegged at $39.76 billion, indicating a year-over-year decline of 3.79%. The consensus mark for 2024 loss is pegged at $4.37 per share compared with the loss of $4.50 over the past 30 days.
The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at 7 cents, up 75% over the past 30 days. The consensus mark for fourth-quarter 2024 revenues is pegged at $10.52 billion, indicating year-over-year growth of 2.31%.
WBD’s earnings beat the Zacks Consensus Estimate in only one of the trailing four quarters, missing in the remaining three quarters, the average negative surprise being 525.45%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
WBD – To Buy, Hold or Sell?
WBD believes that the expanding clientele will help drive top-line growth, driven by an expanding customer base and subscriber revenues.
However, declining ad sales and distribution revenues due to a fall in audience in domestic general entertainment and news networks and soft linear advertising markets in the United States remain headwinds.
WBD shares are undervalued, as suggested by a Value Score of B.
WBD currently has a Zacks Rank #3 (Hold), which implies that investors may want to wait for a more favorable entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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