WBD & WBA Stocks Keep Crashing!!!
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- čas přidán 22. 08. 2024
- WBD stock and WBA stock keep reaching lows. However, those are interesting businesses. There should be value somewhere.
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Nice - Sven is back talking about businesses. I prefer this rather than the last few videos you did.
Best Channel On CZcams
THanks!
Thank you for consistent coverage of both of these. Appreciated
thank you!
How do you feel about HE? Hawaiian electric. Their credit rating is junk status, got a 250m loan from the gov. 900m-1b market cap. 200-250m net income. Monopoly over Hawaiian utilities. Possible pending lawsuit over Maui fires. Where do you think the risk and reward is here?
Sven, I’ve been watching for years. You’ve always said to not invest in turnarounds. This time is different?
WBD could be interesting. I don't mind waiting 3 years for a 3x, if I am comfortable with the business modell and risk (risk being permanent capital loss) :)
Assuming one has patience then time horizon is our one MAJOR advantage over Mr Market - Mr Market is often WAY to focused on the short (to medium) term, so if we can focus on the medium (to long) term then we have an advantage that "noone" else has.
Debt-repayment might lead to a trigger in a few years, but Mr Market will not focus on that until a year or so before WBD swaps from debt-repayment to something else (ideally they would start with dividends, but that might remain of the table?)
I agree. Seriously considering getting back into WBD now. By the time it recovers, it will be too high. Patience is the only advantage us retail investors have over the big players.
Hi Sven,
I would like your opinion on two stocks. The one is Diageo. It's at a historical low valuation, while revenue grows more than normally. The other is Baidu. Baidu has equity equal to the market cap of the stock, whatever they earn is for free. I would like to hear your opinion on those two. Thanks.
Yes, the cheap can always get cheaper... but I like your advice to allocate 20% to these types of deep value / high risk scenarios.
:-)
They already cut the dividend half from 0.48 to 0.25 per quarter WBA
Hey Sven, always appreciate your insights! A few fun stock assessment video suggestions I'm curious to get your take on. EVVTY / PAYC / KNSL / ODFL Cheers!
thanks for suggesting!
When I was in Vegas there was a Wallgreens across the street from CVS. CVS had better prices and more customers.
CVS also owns Aetna
thanks for sharing!
I like wbd because their debt schedule is so far out. These loans are fixed interest some as low as 4%. I think with their strong free cash flow they are positioned well with both a rising or lowering interest rate environment. If rates go up, with their strong cash flows they can buy their own debt for cheaper. If rates go down they can take low interest debt for mergers. John Malone director with 5% also owns most of Siri. 👀
The problem is that with all these cash flows diverted to debt repayments, they have less to focus on their online platform and new content. Investors are not giving credit to the 100 million subscribers because they can be fickle when you don't have good content.
@@khuo0219I agree with the fact that they need to continue spending to develop shows and IP and online platform. Where we may disagree is that I believe that they’re continuing to spend and I believe their shows, IP, and online platform delivers more value than their competitors. But, this is only my opinion
@@khuo0219but they have good content. Even if they don’t have the money to produce things themselves, they can license it out to a company that can.
@@khuo0219 For now they have good content but yes it definitely could change with low Capex. However, the main risk in the business comes from the enormous debt pile and therefore paying down the debt lowers the risk substantially as opposed to every other American company that takes on debt to do buybacks at record level prices. And from the numbers they are actually gaining subs, ARPU and going towards profitability so it's a really interesting one
Sounds like a T story. Look how that turned out
A catalist of WBD could be a positive net income. As the intangable assets and the interest paymnets decline some people might see light at the end of the tunnel
sure, but the same people are asking when will that happen
* catalyst * intangible
less depreciation of intangibles assets means less free cash flow. the depreciation saves taxes.
@@Value-Investingwhy is this hard to figure out? Take what happened this year, how much they managed to pay down the debt and extrapolate years ahead if they keep doing the same thing until they don’t have to pay down the debt anymore. A few years after that, the dividend returns, a definitive metric to know it’s turned around.
@@SuperTWIYyeh but debt repayments increase free cash flow. Servicing 40bn debt at 4% right now is costing 2 billion a year.
And keep in mind they're already as low as 3X free cash flow to begin with
This is one of the best, if not the best, educational channels. I’m glad that Swan’s approach to stock analysis aligns with mine in most aspects.
Sven, you had a position in WBD a year ago when it was $13.75 per share. And now you’re talking about this stock like you are watching it from the side deciding if it’s a good buy. A little bit of humility goes a long way
you missed the reasoning - that was a buy and sell on the oversold spin / bought and sold at a nice profit. Inform yourself before commenting, or as you say, a bit of humility goes a long way :-)!
Hey Sven, thank you for an excellent analysis as always. I would welcome JNJ stock analysis if you were at all thinking about it. It seems to have moved more into value territory now.
thanks for suggesting, but that is not my cup of tea :-(
Sven. Great analysis as usual. You really love those cigar butts but you need to remember that these are companies faced with strong opposition in industries that are changing rapidly. While I appreciate your Graham approach. I would really like you to present great companies like C.Munger would invest in. Even if they are at a fair price 😉
I didn't say I love them, I just make the analysis :-)
Thanks for covering this Sven
My pleasure!
Excellent analyses, Sven. Grazie mille!
When a stock crashes it is difficult to immediately find an excellent opportunity to buy it! If it crashes by many percentage points there is almost always a reason, even if it is not immediately revealed! Usually the price, even if the security does not fail, needs a not short settling period. There's no need to rush.
we have also seen it with the Paypal stock after a more or less long more or less violent decline, we are not yet seeing movements such as to suggest a lightning recovery, there will be but it will still take time and it is not certain that the recovery of the prices either V or U shaped but it could follow an unwanted path!
the question is can they keep up the Cashflow? What would you do with 100.000 € in cash now? Put more money in WBD? I mean either they 2x or 3x or will be bought by someone for cheap
I knew WBA was a "stay away" broken company when they:
1. Stopped cigarette sales
2. Teamed with Theranos
Stopping cigarette sales at an institution whose focus is on health is justified.
@@windgassen They can "justify" all they want but they utterly destroyed shareholders. That's why it was a "stay the fook away" for me. Same for other woke companies.
@@whiskey_tango_foxtrot__so stopping cig sales makes Walgreens a woke company?
Thank you Sven!
thank you!
These are great “value” stocks! They’re so cheap, there’s no way you could go wrong with buying them 😊
Not true. Yes, they are extremely cheap and probably oversold. That means that the risk/reward is probably excellent. However, a stock can ALWAYS go to 0 as Peter Lynch (one of the greatest investors) says. As Sven says these businesses fit well if you have 20 of them as the winners will cover for the losers. I wouldn't even touch WBA with a 10 foot pole if it was in a concentrated portfolio.
Hello this time wbd will the Nba issue have a big impact in the future
I bought some at 14 last July, but it's been falling. While other stocks are breaking records, this one is constantly falling. I regret buying it
:-(
i like the analysis.
but i am a conservative investor, so i like my stocks to be cheap and strong financially, which none of these are at the moment. :)
Thanks for sharing
Walgreens just closed 8000 stores, don't touch it with a 12 foot pole, next Kmart
thanks for sharing
are those fcf of wbd accurate?
yahoo finance saying hey making losses of 1billion each year and fcf is different.
also wbd used to make 10b revenue, had a sudden jump to 30b with decent films. so not sure if that is sustainable in future. might drop down to 10-15b. which would throw a spanner in those predictions and debt repayments.
The jump in revenue is due to spinoff accounting (WBD was spun off from AT&T in 2022).
Also, you can always calculate FCF yourself, and it is often a good idea to do so.
FCF ow WBD was high last year because of the strikes in Hollywood. They will not make 6 billion USD FCF in the upcoming years. Maybe 4 to 5 billion if things go well.
@@sirbongos wasn't wbd dragging down at&t and not other way round.
@@TheScaryGermanGuy Please borrow me your crystal ball.
@@zenastronomyno. Both were just fine. What dragged down T was the huge debt they got into to buy WBD. So this was transferred to WBD when it was spun off. Both would have been fine if they hadn’t merged.
Just take a look who’s shopping at WBA. It’s mostly elders, and their entire digital commerce experience is broken. For that, I’d stay far away until they improve and streamline their digital experience.
thanks for sharing
Beware WBA. The positive EPS of around 2 USD is the adjusted one. GAAP EPS is actually around -6 USD.
I would not evaluate with GAAP, as long as huge write-offs are occuring. Greetings from Würzburg.
Value traps!
Dr. Sven, CVS owns 30%+ of the insurance companies / PBM's, as a pharmacist I knew this shoe would eventually drop, when your competition owns the reimbursement.. you go out of business.
thanks for sharing!
how is the business wba profitable if it has no earnings?
that is because of impairments
Lamb Weston “LW” boring potato company with a PE of around 11. Largest potato producer in North America. This should be down your alley
no competitive advantage, then it doesn't produce, it just processes
Turnarounds are probably not be the best idea.
Could you do Noble corporation plc next, it would really help me out
not a business specialist for that :-(
@@Value-Investing ok, thank you
These are always the most difficult stocks to evaluate imo. They look like bargains but between debt, future dividend cuts, failing business models, and poor performance it's really hard to put a price on. It really comes down to management. Walgreens CEO sounds clueless. I think wbd just went through a ceo change. I like to invest in companies with long term growth potential and I don't see any for either. Stick with the best in breed for media (Disney) and retail pharmacy (Costco or CVS), imo. Thanks Sven!
Yes and no about WBD CEO. David Zaslav has been the CEO of Discovery since 2006 and Discovery was merged with Warner Bros in 2021.
In America Walgreens is plagued by theft especially in large cities.
They let it get out of hand. Theft is not part of a business model, now they are prey cause thiefs know they can.
thanks for sharing
@@Hyper1555wow. Thank for the info. Why not use the old method with the metal that shoots, I think always works. Enough is enough, if things cannot go without aggression, let them go to the all mighty.
@@dimsi1 America always seems to answer crime with more violence, yet crime rates are on par or higher than other countries. I think the culture is broke, Europe too (I live in the Netherlands). For instance, the nordics or Japan have way less crime, less/no garbage and more empathy in their culture. It is easier to have nice people when everyone is nice.
But on topic: Costco has almost no theft , they took control with their business model of subscription and receipt control. Yet almost no retailer tries any copying of the retailers with less theft.
Yes and this theft is not mentioned anywhere unless one assumes theft is “structural”. But is the UK also closing stores? I doubt that.
You said the business is deteriorating, so why would I buy onto it?
Because even a deteriorating business has some innate value if you pay a low enough price?
So it's a turn around?
@@gergelyovics Not necessarily. Say a business produces 5$ of FCF this year, then 4$ next year and so on till it reaches zero. Thats 15$ of FCF attributable to the owner over the span of 5 years. The business is obviously deteriorating. But that cashflow is still worth something. If you pay less than 15$, adjusted for time value of money and incorporating your desired ROI, it's a good investment. This is obviously massively simplified but you get what I mean.
@@janlukaseyer2477 investors will see it as a negative business and you may be able to trade it only. That's my view on this. Why are we not looking for a small cup blooming business with high potential. Warren told one's small investors can find gems in the small cup range.
the current value of the business is the value of the future cash flows it produces, compare that to the price and see whether there is value. Overpaying for a growing business is also an issue.
Hello, I am investing in wbd in Korea It has 5,534 units at an average unit price of 9.82 I'm trying to buy it consistently I want to get a dividend for 2027 and 2028
thanks for sharing!
I feel like the Harry Potter series Max is going to come out with will explode their subscribers. I know it is over a year out but there is a massive Harry Potter following and HBO is really good at doing series.
WBA - shoplifting, cost to close stores. WBD - too much debt, NFLX is king. Great work.
They have the same free cashflow as Netflix, with comparably good content and stronger IPs. They do have too much debt but that's why it's at a 3X free cashflow multiple. When the debt is paid down it is converted to equity and they can start buybacks.
Also, the debt is all at relatively low fixed rates with long maturities. No bankruptcy risk. They've already reduced the debt from 54bn to 42bn.
thanks for sharing!
🗽 What about ROST ?? Since 1995 the stock rises with 18% p.a., for the last 10 years with 12%.
Waiting for a better price...
.
thanks for suggesting!
Dutch stock Alfen tanked also. 45% in one day (June 26th). Dropped almost 70% YTD.
that one can go to zero also
interesting stocks. definitely need more time to follow all that.
:-)
Teva was almost flat since I bought it in 2019 :))
I wouldn't walk into a Walgreens store. For that reason, I'm out.
thanks for sharing!
I'll always like WBD as they own Eurosport where I can watch my Tour de France. Allez, allez, allez !
I say 2 years ago walgreens worth around 8 usd. Evryone Laugh. Warner bros value is true value. At 7,20 usd. Alone Harry potter is worth 1/4 the market cap. If they pay down Debt and Interesse Go down it will easy Double. The debt is also rlly longterm! Warner could also be a buy Target at this Price.
Bros. is ab abbreviation for "Brothers".
Warner Brothers/Discovery
this two takes most space in porfolio big red buing more much of value here in this two stocks.
thanks for sharing!
I hope we hit a bottom for WBA , i need just do DCA , no other option to do now ;) At least avg price is going lower quickly with this drop . I guess price around 25 USD per share should be fine. In the mean time i will accumulate dividends and sitting on potential loss /you can loose money only if you sell/ :)
Thank you Sven for another analysis of "ugly" stocks .
"I am down so much now so I have to buy more"? Spoken like a true gambler.
@@fomobull4187 yes because you loose only if sell, I do not think WBA worth a price from 1998 now so not sure if pure gamble , but investing is little bit a gamble all the time
@@fomobull4187You also have to learn the difference between gamble and educated guess.
Walgreens will file for bankruptcy in few years
Negative
Short it then with all you have, easy money.
Either bankruptcy or taken over.
SEDG?
czcams.com/video/EX8cMTSH23U/video.html
I've been adding and averaging down WBD since T gave me a few shares. I think it's a great opportunity, very undervalued and much potential despite the cable thing. Plus as a cinema lover (and also some TV series), it's great being owner of many of the greatest movies and shows ever and them some recent ones (even despite some woke propaganda...). It has become one of my biggest positions already and I don't mind waiting for 2027 or whatever if it can easily double or triple, if not more. Thanks!
thanks for sharing! Reward for waiting makes this a difficult hold and average down...
@@Value-Investing I can wait. I have patience... for many things. Investing is one of them. I hope it pays off beautifully someday!
Go cover your ear with a fake bandage, sheep.
White Cynthia Miller Thomas Moore Patricia
The destruction of shareholder value by Walgreens management team and board is astonishing. For such a steady and simple business this actually seems like a difficult feat - likely the company could have operated business as usual since the 2000s and been better off
I thought the stores kept getting robbed, that’s why.
@@TheBooban petty theft doesn't destroy 20b in market cap .. it's not even enough theft to result in sales declines
@@fern1079 it’s not petty. It’s huge. Caused them lock up all their stuff so customers have to wait. But no staff to unlock it. So customers just leave. You don’t want to go to a shop and see thieves. Insurance went through the roof. Lawlessness has huge consequences. What is an employee or customer got hurt? Even if petty, it has huge consequences. You’re belittling it way too much.
And what’s that mall in NYC with the new subway station? They had to just leave. Nobody wants to be around criminals.
@@TheBooban from every point you just made, you have to draw a line back to the actual numbers. Revenues were not impacted enough by anything you stated to show material declines. It's definitely not ideal, but Walmart and others have spoken about petty theft being an issue and noted shrinkage numbers increasing. Other stocks did not crater 90% from highs over decades. To suggest the 90% decline is from recent uptick in theft is just not true.
@@fern1079 what do you mean? I think I was clear it’s not just counting the items stolen.
So what’s your explanation? In the vid I just hear “structural”. What’s that?
Answer: He's doing NOTHING. 🤣
I think they are losing the battle of the global battle for eyeballs - it is limited and they are not one of the best.
Thanks for sharing!
Wait until the S&P goes down 50% or more. It's coming.
What will happen then?
What broker are you guys using
IBKR
Interactive Brokers
WBA another stock i wish i shorted 3 years ago
:-)))
wba need to be 19+ now not 11 i buy with all my $ 2000s
thanks for sharing!
Both look like zeros to me
Then short it, easy money.
@@laciepyu255 Thanks, I've been short both for a while now. They are both dying companies with too much debt. Anything can happen though. If the facts change, I'll change.
@@TheJermiester You should research your stocks better, regardless if short or long. Both companies don't struggle with debt, but with their business model.
@@laciepyu255 I disagree, but if you don't think the debt is a problem then you should buy them. It's easy money.
thanks for sharing!
I think these two companies fall into the same category, graham value as medifast. You count the liquidation value, check the debt and look around for catalysts
WBD is much higher quality in my opinion, and a lot cheaper
thanks for sharing!