We've been asking ourselves recently if the market has placed a fair valuation on News. Let's dive into some of the fundamental values of this Large-Cap Consumer Discretionary company to determine if there might be an opportunity here for value-minded investors.
a Lower P/B Ratio Than Its Sector Average but Its Shares Are Expensive:
News Corporation, a media and information services company, creates and distributes authoritative and engaging content, and other products and services for consumers and businesses. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 20.93 and an average price to book (P/B) ratio of 2.93. In contrast, News has a trailing 12 month P/E ratio of 31.5 and a P/B ratio of 1.71.
News has moved -3.4% over the last year compared to 19.7% for the S&P 500 — a difference of -23.1%. News has a 52 week high of $31.61 and a 52 week low of $23.38.
The Company's Revenues Are Declining:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $10,074 | $9,008 | $9,358 | $8,437 | $8,012 | $8,252 |
| Operating Margins | 4% | -17% | 5% | 10% | 5% | 7% |
| Net Margins | 2% | -14% | 4% | 7% | 2% | 3% |
| Net Income (M) | $155 | -$1,269 | $330 | $623 | $149 | $266 |
| Net Interest Expense (M) | -$59 | -$25 | -$53 | -$44 | -$49 | -$18 |
| Depreciation & Amort. (M) | $659 | $644 | $680 | $372 | $415 | $440 |
| Diluted Shares (M) | 590 | 593 | 595 | 578 | 574 | 570 |
| Earnings Per Share | $0.26 | -$2.16 | $0.56 | $1.05 | $0.26 | $0.46 |
| EPS Growth | n/a | -930.77% | 125.93% | 87.5% | -75.24% | 76.92% |
| Free Cash Flow (M) | $356 | $342 | $847 | $1,044 | $745 | $741 |
| CAPEX (M) | $572 | $438 | $390 | $310 | $347 | $357 |
| Total Debt (M) | $1,201 | $1,256 | $2,270 | $3,025 | $3,042 | $1,967 |
| Net Debt / EBITDA | -0.07 | 0.35 | 0.08 | 1.4 | 1.68 | 0.21 |
| Current Ratio | 1.36 | 1.26 | 1.42 | 1.28 | 1.44 | 1.73 |
News benefits from strong operating margins with a positive growth rate, generally positive cash flows, and positive EPS growth. The company's financial statements show a decent current ratio of 1.73 and healthy leverage levels. However, the firm has declining revenues and decreasing reinvestment in the business.
