Time Warner Inc. (NYSE:TWX) February 22, 2015

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TWX-US
Implied Price
NEUTRAL
59.86 88.13
A Price as of Close Feb 20 84.53 USD
B CapitalCube Median Implied Price 80.26 USD * CapitalCube Price is over trading range * CapitalCube Price is below trading range
CapitalCube Estimate Range 74.31 - 86.22 USD NA
52 Week Range 59.86 - 88.13 USD
Fundamental Score
 0  100
A Fundamental Score (TWX) 36
B Fundamental Score(Peer Median) 53
Dividend Score
 0  100
A Dividend Quality Score (TWX) 83
B Dividend Quality Score (Peer Median) 67
Dividend Yield
0.71 4.50
A Dividend Yield (TWX) 1.47
B Dividend Yield (Peer Median) 1.50
Analysis
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Fundamental Analysis

Capital Investment Strategy The company's relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode. Maintenance Mode

Maintenance Mode: Companies where 3 year change in Capital and sustained Operating Returns (3-year average ROIC) are both below the peer median, suggesting minimal reinvestment in a problematic business.
The company's relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.

Earnings Leverage Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings. Earnings Focus

Earnings Focus: Companies where the yearly Revenue Growth is below peer median while Net Income Growth is above peer median suggesting that the company is focused on earnings.
Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.

Leverage & Liquidity

Relative Valuation Time Warner Inc. trades at a lower Price/Book multiple (2.87) than its peer median (3.62). P/B below peers

P/B below peers: Price to Book Value is trading below peer median.
Time Warner Inc. trades at a lower Price/Book multiple (2.87) than its peer median (3.62).

Valuation Drivers The market expects TWX-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.

The market expects TWX-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.

Drivers of Margin The company's margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.

The company's margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.

Growth Expectations While TWX-US's revenues growth has been below the peer median in the last few years, the market still gives the stock a PE ratio that is around peer median and seems to see the company as a long-term strategic bet.

While TWX-US's revenues growth has been below the peer median in the last few years, the market still gives the stock a PE ratio that is around peer median and seems to see the company as a long-term strategic bet.

Operations Diagnostic TWX-US's relative asset efficiency and net profit margins are both around the median level.

TWX-US's relative asset efficiency and net profit margins are both around the median level.

Sustainability of Returns TWX-US's return on assets has improved from below median to about median among its peers over the last five years.

TWX-US's return on assets has improved from below median to about median among its peers over the last five years.

Likely Corporate Actions

Dividend Action

While TWX-US has a high quality dividend and a moderate cash cushion, its relative operating performance is not strong enough to suggest an increase in the dividend.

Equity Action

The company's current share price is not sufficiently lower than its 52-week high (currently about 4.08% below) and does not justify a share buyback as the best use of cash at this time.

M&A Action

While TWX-US has the size (by book value) to acquire other firms within this peer group and may need to do so to meet the market's growth expectations, it may not be able to add more goodwill to the balance sheet.

Dividend Quality

Dividend Coverage Moderate

The ending cash balance, with a dividend coverage of 2.36x, provides a moderate cushion in case of a significant reduction of cash flows in the future.

Dividend Quality High Quality

High Quality: Dividends that are fully covered from operating and investing cash flow, net of any cash outflow from debt repayments and net of a decrease in deposits (for banks) are considered to be high quality. For more information, please refer to the Corporate Actions report.
Over the last twelve months (prior to December 31, 2014), TWX-US paid a high quality dividend, which represents a yield of 1.50% at the current price.

Dividend Quality Trend Consistent High Quality

Consistent High Quality: Over the last 5 years, all dividends paid by the company were of high quality. For more information, please refer to the Corporate Actions report.
Dividends paid during each of the last five years were consistently of high quality.

Accounting Red Flags

Accounting Quality

TWX-US's net income margin for the last twelve months is around peer median, which combined with relatively low accruals suggests a possible overstatement of its reported net income.

Management of Reserves

Time Warner Inc.'s accrual levels over the last twelve months are modestly negative but less than the peer median which suggests some amount of draining in its reserves.

Material Categories

Excluding the effects of change in revenue, the accounting categories causing the most impact on the movement of net income from the prior period to the current period are Accounts Payable, Intangible Assets and Business Combination Reserves.
Characteristics
Key Valuation Items

Price to Book (P/B)

2.87

Price to Earnings (P/E)

18.46

Price to Sales

2.50

Price / EBITDA

10.30

Price to Assets

1.11

Price / FCF

21.93

EV / EBITDA

EV / FCF

Dividend Yield

1.47

PEG Ratio

1.63
Profitability

Gross Margin

42.76

EBIT Margin

21.68

Net Margin

13.56

FCF Margin

11.41

Operating Margin

21.68

Pre-Tax Margin

16.65

ROE

14.01

ROIC

7.85

ROA

5.72
Efficiency

Debt / Equity

91.90

Debt / Market

31.65

Debt / Book

47.89

Debt / EV

Coverage Ratio

61.24

Interest Coverage

5.21

Cash Days

29.10

Working Cap. Days

54.79

Receivable Days

101.24

Payable Days

57.84

Inventory Days

24.21

Sales / Assets

0.42
Growth

Earnings Growth YOY

8.73

Revenue Growth YOY

-5.69

Oper. CF Growth YOY

-0.89

EPS Growth YOY

11.34

FCF Growth YOY

3.05
Price History

Peers

FA Score

DQ Score

close

52 week range

84.53

59.86

88.13

USD

104.55

76.31

104.69

USD

59.50

48.83

68.10

USD

58.50

47.74

59.51

USD

69.71

63.11

89.76

USD

148.58

128.78

155.95

USD

36.65

35.00

42.46

USD

69.34

52.73

78.39

USD

Company Profile

Time Warner, Inc. is a media and entertainment company. It operates through Turner, Home Box office, Warner Bros and Time, Inc. business segments. The Turner segment consisting principally of cable networks and digital media properties. The Home Box Office segment consisting principally of premium pay television services domestically and premium pay and basic tier television services internationally. The Warner Bros segment principally consisting of feature film, television, home video and videogame production and distribution. The Time, Inc. segment consisting principally of magazine publishing and related websites and operations. The company was founded on January 10, 1990 and is headquartered in New York, NY.

Closing Stock Price

USD 84.53

As of Date

February 20, 2015

One Year Performance

35.689%

One Month Performance

5.20225%

Industry Group

Media Conglomerates

52 wk. Range

USD 59.857 - USD 88.13

Market Cap (Millions)

USD 70329

Total Shares Outstanding

832
Latest Filing Dates

Annual

December 31, 2014

Semi Annual

N/A

Quarterly

December 31, 2014

Next Release Date

April 28, 2015

Filing Currency

USD

Listed Exchange

NYSE
Peers


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Conference Call Transcripts
2d
Time Warner Inc.'s Executive Vice President just disposed of 79,677 shares http://stks.co/r1Xki $TWX
Feb 20 10:4 PM
Gordon Meatballs
2d
$TWX $LGF $NFLX too expensive? Go in Europe! Europacorp (ECP.PA) Lucy & Taken producer is in sale for a 5.4 PER ! #smartmoneymoveineurope
Feb 20 4:39 PM
Stock Markets Daily
2d
$TWX 3 Strengths and Weaknesses that will affect the price of Time Warner (TWX) http://stks.co/b1k3S
Feb 20 3:4 PM
ValueWalk
3d
Canyon's Value Realization Fund Portfolio "Void Of Duration" by @MarkMelin http://stks.co/s1WsU $TWX $CMCSA http://stks.co/r1X90
Feb 19 7:12 PM
Finances Stock releases
3d
$TWX Warner Bros. Chairman & CEO Kevin Tsujihara to Participate in the Morgan Stanley Technology, Media & Telecom http://stks.co/i1o2Q
Feb 19 4:1 PM
Ophir Gottlieb
4d
Want an Argument Against $NFLX Going into Mega Content Creation? Revenue per Employee http://stks.co/j1nz9 $NFLX $AMC $TWX $FOXA
Feb 19 12:10 AM
1
Ophir Gottlieb
4d
$NFLX vs Content Makers Gross Margin Comparisons ---> http://stks.co/g1niz #Unexpected $NFLX $AMC $TWX $FOXA
Feb 19 12:5 AM
Shannon Farquharson
4d
$TWX lookin' good.
Feb 18 11:55 PM
Conference Call Transcripts
4d
Time Warner Inc.'s EVP and General Counsel just picked up 32,552 shares http://stks.co/h1nxk $TWX
Feb 18 11:17 PM
1
Insider Trades
4d
$TWX : New Insider Transaction on TWX by EVP & Chief Financial Officer Averill Howard M: http://stks.co/a1jR6
Feb 18 11:13 PM
Conference Call Transcripts
4d
Time Warner Inc.'s EVP & Chief Financial Officer just picked up 4,643 shares http://stks.co/c1jQP $TWX
Feb 18 11:12 PM
Conference Call Transcripts
4d
Time Warner Inc.'s Chairman of the Board and CEO just picked up 112,740 shares http://stks.co/b1jJd $TWX
Feb 18 11:9 PM
Ophir Gottlieb
4d
Argument Against Netflix Going into Mega Content Mode? $NFLX $AMC $TWX $FOXA Revenue per Employee http://stks.co/j1nqG - Mic Dropped.
Feb 18 8:7 PM
Ophir Gottlieb
4d
$NFLX $AMC $TWX $FOXA Gross Margin % Comps ---> http://stks.co/t1WoJ - This Chart Absolutely Stunned Me...
Feb 18 8:5 PM
BValue
5d
@Winnerli David Einhorn just bought $TWX $KPPC $COV $LTM $YHOO $TPH $KEYS $CRC $HYH $GDOT $CBI $GRBK $FSAM Check more http://stks.co/s1Vyz
Feb 17 11:27 PM
WinnerLi
5d
David Einhorn just bought $TWX $KPPC $COV $LTM $YHOO $TPH $KEYS $CRC $HYH $GDOT $CBI $GRBK $FSAM . Check more: http://stks.co/p1WRc
Feb 17 10:2 PM
Conference Call Transcripts
5d
SENECA CAPITAL INVESTMENTS, L.P. appears to have added to its $TWX position in the most recent quarter http://stks.co/g1n5T
Feb 17 9:24 PM
iBillionaire
5d
Both David Einhorn and Leon Cooperman bought into $TWX in Q4. #13F
Feb 17 6:28 PM
Open Outcrier
5d
omega disclosing stakes $TWX $BHI $GILD $APC etc
Feb 17 6:9 PM
Wayne Duggan
5d
Feb 17 3:1 PM
Stock Markets Daily
5d
$TWX Media Value Watch: Time Warner Inc. (NYSE:TWX) http://stks.co/q1VjA
Feb 17 2:25 PM
ThudderWicks
5d
Deals of the Day: $TWX , $AAPL , $MRVL , $YHOO , $FB , $HTZ , $C , $BABA , $LBTYA and more http://stks.co/e1iVO
Feb 17 2:14 PM
ValueWalk
6d
Greenlight Capital Buys Time Warner, Yahoo http://stks.co/p1Vk4 $YHOO $AAPL $TWX $MRVL
Feb 16 11:43 PM
1 1
Insider Monkey
6d
$AAPL , $MU , $TWX : Big Winners and Top Picks for David Einhorn’s Greenlight Capital http://stks.co/t1VeI
Feb 16 8:43 PM
1
Krish Sekar
8d
$TWX this is going back to 90
Feb 14 8:28 PM
@The$AAPLpickr
8d
A Comcast-Time Warner merger in the works? $CMCSA $TWX http://stks.co/j1m4a
Feb 14 10:4 AM
3
G. Thomas Lackey Jr. CMT CFP®
9d
Feb 14 2:59 AM
Yamasuta.com
9d
$TWX Signal still LONG at 83.31 - issued by Yamasuta.com - Free Algorithmic Software - Free Until Jan 1st, 2016 http://stks.co/f1lS8
Feb 13 1:37 PM
v2 Ratings
10d
$TWX still looks attractive (rated 8.4 as price is up to 83.20). Price vs ratings chart: http://stks.co/c1gbs
Feb 12 8:51 PM
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Closing Stock Price

USD 84.53

As of Date

February 20, 2015

One Year Performance

35.69%

One Month Performance

5.20%

Industry Group

Media Conglomerates

52 wk. Range

USD 59.857 - USD 88.13

Market Cap (Millions)

USD 70,329

Total Shares Outstanding (Millions)

832.00
Latest Filing Dates

Annual

December 31, 2014

Semi Annual

N/A

Quarterly

December 31, 2014

Next Release Date

April 28, 2015

Filing Currency

USD

Listed Exchange

NYSE
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