News Corp (NWSA) AI Stock Analysis

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News Corp

(NASDAQ:NWSA)

65Neutral

News Corp shows strong financial performance with robust profitability and cash flow, further bolstered by positive earnings call outcomes. However, the stock's technical indicators suggest bearish sentiment, and its valuation appears high, impacting its overall attractiveness.

Positive Factors

Earnings Performance

News Corp reported total revenue and Adj. EBITDA above consensus estimates.

Portfolio Simplification

The divestment is further evidence of the company’s commitment to the simplification of its investment portfolio.

Strategic Divestment

NWSA's exit from FOXTEL is seen as both a financial and strategic positive for the company.

Negative Factors

Advertising Environment

The firm pointed to a more challenging ad environment within News Media.

Capital Requirement

Increasing the REA stake by 19% may require $3.9 billion in capital, with identified sources including the pending sale of Foxtel and selling a portion of Move to REA.

Cash Proceeds

NWSA will receive less cash upfront than expected from the FOXTEL exit.

News Corp (NWSA) vs. S&P 500 (SPY)

Market Cap

$14.54B

Dividend Yield0.81%

Average Volume (3M)3.95M

Price to Earnings (P/E)33.9

Beta (1Y)0.88

Revenue Growth-1.51%

EPS Growth82.74%

CountryUS

Employees23,900

SectorCommunication Services

Sector Strength76

IndustryEntertainment

Share Statistics

EPS (TTM)0.72

Shares Outstanding378,055,080

10 Day Avg. Volume4,969,887

30 Day Avg. Volume3,951,223

Financial Highlights & Ratios

PEG Ratio0.41

Price to Book (P/B)N/A

Price to Sales (P/S)1.78

Price to Cash Flow (P/CF)20.40

P/FCF Ratio20.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$39.40

Price Target Upside63.62% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering6

News Corp Business Overview & Revenue Model

Company DescriptionNews Corporation, a media and information services company, creates and distributes authoritative and engaging content, and other products and services for consumers and businesses worldwide. It operates in six segments: Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other. The company distributes content and data products, including The Wall Street Journal, Barron's, MarketWatch, Investor's Business Daily, Factiva, Dow Jones Risk & Compliance, Dow Jones Newswires, and OPIS through various media channels, such as newspapers, newswires, websites, mobile apps, newsletters, magazines, proprietary databases, live journalism, video, and podcasts. It also owns and operates daily, Sunday, weekly, and bi-weekly newspapers comprising The Australian, The Weekend Australian, The Daily Telegraph, The Sunday Telegraph, Herald Sun, Sunday Herald Sun, The Courier Mail, The Sunday Mail, The Advertiser, Sunday Mail, The Sun, The Sun on Sunday, The Times, The Sunday Times, and New York Post, as well as digital mastheads and other websites. In addition, the company publishes general fiction, nonfiction, children's, and religious books; provides sports, entertainment, and news services to pay-TV and streaming subscribers, and other commercial licensees through cable, satellite, and internet distribution; and broadcasts rights to live sporting events. Further, it offers property and property-related advertising and services on its websites and mobile applications; online real estate services; and financial services. The company was founded in 2012 and is headquartered in New York, New York.

How the Company Makes MoneyNews Corp makes money through a diversified revenue model comprising several key streams. In the news and information services sector, revenue is generated through advertising, subscriptions, and licensing of content across its media properties, including newspapers, magazines, and digital platforms. The book publishing arm, HarperCollins, earns revenue through the sale of books in both digital and print formats. Digital real estate services, primarily through Realtor.com and other international platforms, contribute to revenue via online advertising and lead generation services for real estate professionals. Additionally, the company's subscription video services generate income from subscriptions and advertising sales. Strategic partnerships and acquisitions also play a crucial role in expanding News Corp's reach and revenue potential.

News Corp Financial Statement Overview

Summary

News Corp demonstrates strong profitability and cash flow metrics, with improved margins and effective cost management. The balance sheet shows increased leverage, but remains stable. Revenue growth is sluggish, indicating a need for focus on growth and debt management.

Income Statement

Positive

News Corp has shown a consistent increase in its net profit margin and EBIT margin in the TTM, indicating improved operational efficiency. However, the revenue growth rate is negative compared to the previous fiscal year, which is a concern. The gross profit margin has improved significantly, showcasing effective cost management.

Balance Sheet

Positive

The company's debt-to-equity ratio has increased over time, indicating higher leverage, which may pose risks. The equity ratio remains stable, reflecting a balanced asset structure. The return on equity (ROE) has improved, signaling enhanced profitability for shareholders.

Cash Flow

Positive

Operating cash flow remains strong with a positive free cash flow growth rate. The operating cash flow to net income ratio is favorable, suggesting healthy cash generation relative to profits. The company has managed its capital expenditures effectively, supporting positive free cash flow.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
9.81B	10.09B	9.88B	10.38B	9.36B	9.01B
	Gross Profit
6.93B	4.30B	4.04B	4.57B	3.85B	3.36B
	EBIT
851.00M	805.00M	230.00M	1.02B	671.00M	2.20B
	EBITDA
1.40B	1.38B	1.24B	1.73B	1.29B	-695.00M
	Net Income Common Stockholders
559.00M	266.00M	149.00M	623.00M	330.00M	-1.54B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
741.00M	1.96B	1.83B	1.82B	2.24B	1.52B
	Total Assets
16.56B	16.68B	16.92B	17.22B	16.77B	14.26B
	Total Debt
0.00	4.05B	4.09B	4.02B	3.43B	2.40B
	Net Debt
-741.00M	2.09B	2.26B	2.19B	1.19B	888.00M
	Total Liabilities
4.12B	7.67B	7.98B	8.08B	7.63B	5.87B
	Stockholders Equity
12.44B	8.12B	8.06B	8.22B	8.21B	7.58B
Cash Flow		Free Cash Flow
654.00M	602.00M	593.00M	855.00M	847.00M	342.00M
	Operating Cash Flow
1.07B	1.10B	1.09B	1.35B	1.24B	780.00M
	Investing Cash Flow
-302.00M	-524.00M	-574.00M	-2.08B	-1.29B	-427.00M
	Financing Cash Flow
-639.00M	-441.00M	-501.00M	404.00M	699.00M	-472.00M

News Corp Technical Analysis

Technical Analysis Sentiment

Negative

Last Price24.08

Price Trends

50DMA

27.81

Negative

100DMA

28.07

Negative

200DMA

27.49

Negative

Market Momentum

MACD

-0.28

Negative

RSI

44.43

Neutral

STOCH

37.95

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NWSA, the sentiment is Negative. The current price of 24.08 is below the 20-day moving average (MA) of 26.70, below the 50-day MA of 27.81, and below the 200-day MA of 27.49, indicating a bearish trend. The MACD of -0.28 indicates Negative momentum. The RSI at 44.43 is Neutral, neither overbought nor oversold. The STOCH value of 37.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NWSA.

News Corp Risk Analysis

News Corp disclosed 27 risk factors in its most recent earnings report. News Corp reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

News Corp Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOXA	82 Outperform	$21.61B	10.64	20.09%	1.08%	4.29%	177.70%
FOX	81 Outperform	$21.61B	9.79	20.09%	1.18%	4.29%	177.70%
NWSA	65 Neutral	$14.54B	33.90	5.23%	0.81%	-1.51%	82.74%
PARA	61 Neutral	$7.89B	―	-31.94%	1.81%	-1.48%	-450.15%
Sector *	58 Neutral	$24.96B	3.11	-10.53%	4.28%	2.32%	-43.03%
WBD	58 Neutral	$19.81B	―	-28.54%	―	-4.91%	-259.71%
PARAA	52 Neutral	$7.89B	―	-31.94%	0.89%	-1.48%	-450.15%

* Communication Services Sector Average

Performance Comparison

NWSA

News Corp

24.08

-1.24

-4.90%

PARA

Paramount Global Class B

10.86

0.09

0.84%

FOXA

Fox

48.55

17.56

56.66%

FOX

Fox

44.53

16.08

56.52%

PARAA

Paramount Global

22.57

-0.85

-3.63%

WBD

Warner Bros

8.09

-0.60

-6.90%

News Corp Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -16.01% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant achievements, particularly in revenue and profitability growth, successful asset divestment, and strategic partnerships, resulting in credit rating upgrades. However, there were challenges in the News Media segment and specific market conditions like the US housing market. Despite these challenges, the overall tone was positive due to strong performance in key growth areas and strategic advancements.

Highlights

Revenue and Profitability Growth

Revenues on a continuing operations basis increased 5% to $2.24 billion, while profitability rose 20% to $478 million. Net income from continuing operations surged 58% to $306 million compared to the same quarter in the previous year.

Foxtel Sale to DAZN

News Corp agreed to sell Foxtel to DAZN for AUD 3.4 billion, which is approximately seven times Foxtel's fiscal 2024 EBITDA. This transaction is expected to have a meaningful impact on News Corp's balance sheet.

Credit Rating Upgrade

Following the Foxtel sale agreement, both S&P Global and Moody's upgraded News Corp's credit rating to investment grade.

Digital Real Estate Segment Performance

Digital Real Estate revenue increased 13% to $473 million and segment EBITDA margin by 26% to $185 million. Realtor.com saw accelerated growth in rental, seller, and new homes revenues.

Dow Jones Growth

Dow Jones revenue grew 3% to $600 million, with segment EBITDA expanding 7% to $174 million. Digital circulation revenue grew at its fastest pace in two years.

Book Publishing Success

Book Publishing reported revenue growth of 8% to $595 million and segment EBITDA surged 19% to $101 million. Audio revenue increased by 13%.

Lowlights

News Media Revenue Decline

News Media revenue fell by 2% to $570 million, though segment EBITDA grew by 30%.

Factiva Customer Dispute

A customer dispute led to an over 300 basis point adverse impact on Dow Jones' professional information business revenue.

Challenges in US Housing Market

Realtor.com faced a hostile housing market with 30-year mortgage rates above 7%, impacting lead volumes and average monthly unique users.

Company Guidance

During News Corp's second quarter fiscal 2025 earnings call, the company reported a 5% increase in revenues from continuing operations, reaching $2.24 billion, with profitability rising 20% to $478 million. Key performance metrics included a 58% increase in net income from continuing operations to $306 million and an EPS of $0.40, up from $0.28 in the prior quarter. The company's margin also improved from 18.7% to 21.4%. The Digital Real Estate segment saw a 13% revenue increase to $473 million, while Dow Jones revenue grew 3% to $600 million. Book Publishing revenue expanded 8% to $595 million. News Corp plans to sell Foxtel for AUD 3.4 billion, which will enhance its balance sheet and maintain a 6% stake in DAZN. The company expects the transaction to close in the second half of the fiscal year, subject to regulatory approvals.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.