Discovery Stock Analysis
I've been investing in Discovery $DISCA since last week. Hopefully, the stock price will keep going down so that we can buy more. Just like ViacomCBS $VIAC , Discovery was a victim of the margin call on Archegos Capital, managed by Bill Hwang. The stock gained 300% in one year before crashing by 60% in weeks.
๐บ ๐ฝ๐ช๐จ๐๐ฃ๐๐จ๐จ ๐ฟ๐๐จ๐๐ง๐๐ฅ๐ฉ๐๐ค๐ฃ:
โข Discovery is a Mass media factual television company, operating under
two segments: US Networks and International Networks
โข US Networks: Discovery Channel, Food Network, HGTV, TLC, Animal
Planet, amongst others
โข International Networks: Eurosport, Dmax, amongst others
โข Launched streaming service, Discovery+, earlier this year
โข Exclusive Rights to Olympics and BBC (outside UK, China and Ireland),
โข 800 million monthly unique viewers globally
โข 250 million hours viewed daily
โข 65% of revenues in 2020 came from US Networks, 38% Advertising and
27% Distribution
โข 35% of revenues in 2020 came from International Networks, 15%
Advertising and 19% Distribution
โข Since shows are factual, expenses are limited compared to competitors
with 2020 operating margins of 25% vs 18% for Viacom and Netflix
$NFLX and 2% for Disney $DIS (20% in 2019)
๐๐พ๐๐ฉ๐๐ก๐ฎ๐จ๐ฉ๐จ:
โข Content creation/acquisition is less expensive compared to competitors
โข Olympics in 2021 could bring $175 million to $200 million in operating
income before depreciation and amortization
โข Discovery+ ARPU expected to 3-4X US Networks Linear
โข Possible share buybacks
โ ๏ธ๐๐๐จ๐ ๐จ:
โข Streaming business is very competitive with Netflix, Disney+, Amazon
Prime, Apple TV+ and others
โข Streaming business might be a cash flow drain in initial years
โข Cable Networks businesses are in decline
โข Concentrated business
๐ต๐๐๐ฃ๐๐ฃ๐๐๐๐ก ๐ผ๐ฃ๐๐ก๐ฎ๐จ๐๐จ:
โข Revenues of $10.7 Billion in FY20 down from $11.1 Billion in FY19
โข Operating income of $2.73 Billion in FY20 vs $3.19 Billion in FY19
โข Net income of $1.21 Billion in FY20 down from $2.06 billion in FY19
โข Free Cash flow of $2.33 Billion in FY20 vs $3.11 million for FY19
โข Balance Sheet
Total assets: $34.0 Billion ; total liabilities: $22.0 Billion; book value: $10.4
Billion
Cash: $2.09 Billion, debts: $15.4 Billion, current assets: $6.13 Billion,
current liabilities: $3.08 Billion
๐ฐ๐๐๐ก๐ช๐๐ฉ๐๐ค๐ฃ ๐๐ฃ๐ ๐พ๐ค๐ฃ๐๐ก๐ช๐จ๐๐ค๐ฃ:
My analysis shows that Discovery stock is undervalued, even with a margin of safety.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=HR5WsNrqaAU&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=1
Hereโs the full analysis of Discovery:
https://ishfaaqpeerally.teachable.com/courses/662813/lectures/31950949
ย
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