We recently compiled a list of the 6 Undervalued Entertainment Stocks To Buy Right Now. In this article, we are going to take a look at where Warner Bros. Discovery Inc. (NASDAQ:WBD) stands against the other undervalued entertainment stocks.
Entertainment stocks provide interesting investment opportunities. Unlike many other businesses, these companies allow the retail investor to have some association with the company that makes them feel a part of it. For example, Disney was a big part of many people’s childhood. Owning the company’s stock is often a way for them to not only honor the company but also feel a part of the company rather than just a viewer of its content.
At the same time, these stocks can also be prone to ups and downs, largely dependent on how the public perceives the content they make. If the content is loved, the company makes money and the stock goes up. If it doesn’t receive a good response from the public, the company can’t make enough money, resulting in a stock price decline. Regulatory risks, innovative technologies, and high production costs continue to plague the sector. However, these issues often bring the stock down to levels where investors would love to take a position in the stock.
We look at 6 such companies that are trading at a low valuation and are a steal at these levels. To come up with our list of 6 undervalued entertainment stocks, we considered stocks with a price-to-book value of below 3.0 and a market cap between $5 billion and $30 billion.
A movie theater auditorium filled with an audience enjoying a blockbuster film.
Warner Bros. Discovery Inc. (NASDAQ:WBD)
Warner Bros. Discovery Inc. is an entertainment and media company that operates through network, DTC, and studio segments. The company produces and releases TV programs. It presents its content through various platforms including traditional TV channels, digital streaming services, linear networks, authenticated GO applications, and other platforms. The stock trades at a price-to-book value of 0.72 and has been trading at that level throughout the last year.
WBD doesn’t get as much attention as Netflix and Disney when it comes to streaming. That’s because it doesn’t make fresh content like Netflix does. This is a hard and capital-intensive job and it’s unlikely WBD will be able to pull it off. But the company has impressive IP including names like Harry Potter, Batman, and Game of Thrones among others. If it can find a way to repurpose this content and build on it, it could unlock some serious value.
More recently, the company is set to sell TVN Group, a leading Polish TV broadcaster, and has already received three different offers for the company. This would help the company simplify its structure and also pay off debt. On its Q3 earnings call in November, the company reiterated its plans to use its cash flows to pay off debt.
Overall WBD ranks 3rd on our list of the undervalued entertainment stocks to buy right now. While we acknowledge the potential of WBD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as WBD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.