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Warner Music Group Corp. (WMG)
Intrinsic Value (DCF)
Current$30.88
→
Intrinsic$6.55
-79%
$3.17$6.55$12.97
Current price reflects execution expectations above 10% growth — not unreasonable for quality businesses.
Range: Bear $3 → Bull $13. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $13).
| Discount ↓Growth → | 6% | 8% | 10% | 12% |
|---|---|---|---|---|
| 8% | $9 | $10 | $11 | $12 |
| 10% | $5 | $6 | $7 | $7 |
| 12% | $3 | $3 | $4 | $5 |
| 14% | $2 | $2 | $3 | $3 |
Bull Case
- Bull case ($13) with 12% growth, 9% discount rate
- Conservative 10% growth assumption is achievable based on track record
Bear Case
- Bear case ($3) implies 90% downside at 8% growth, 12% discount
- Trading 79% above base case — execution must exceed assumptions to justify
- Price exceeds bull case ($13) — requires exceptional execution
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5-Year Free Cash Flow Projection
Year 1$591.73M
Year 2$649.62M
Year 3$713.17M
Year 4$782.94M
Year 5$859.53M
Terminal$12.65B
📐 Model Inputs
Growth Rate9.8%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$539.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.