What’s Happening With News Corp Stock?

NWSA: News logo

[Note: News Corp Fiscal Year Ends in June]

After a 17% decline over the last twelve months, at the current price of around $18 per share, we believe News Corp stock (NASDAQ: NWSA), a global, diversified media and information services company, is fairly priced. NWSA stock fell from around $21 to $18 over the last twelve months, underperforming the broader indices, with the S&P also falling about 6% over the same period. The stock declines during this period can be attributed to fears of a slowing economy driven by inflation. The company also missed estimates on both the top and bottom lines in the fiscal first half of 2023 (ended December 31). News Corp’s revenues declined 4% year-over-year (y-o-y) to $5 billion while its profitability declined 75% y-o-y to 18 cents in the first six months of FY 2023. The results were driven by lower advertising, consumer, and real estate revenues over this period. Also, the company witnessed the negative impact of foreign currency fluctuations. Segment-wise, NWSA’s Book Publishing saw the largest dip and was down 12% y-o-y in the fiscal first half, primarily due to lower print and digital book sales in the U.S. market due to slowing consumer demand industry-wide, difficult frontlist comparisons, and the impact of Amazon’s reset of its inventory levels and rightsizing of its warehouse footprint.

Going forward, NWSA expects higher costs due to the supply chain and inflationary pressures. Advertising conditions and visibility remain limited across businesses. It also expects ongoing foreign exchange headwinds, given the current spot rate for the Australian dollar and pounds sterling compared to the prior year. Looking at each of the segments, Australian residential new buy listings for January declined 9% as it lapped tougher prior-year comparisons at Digital Real Estate Services. At Move, the company continues to expect lead and transaction volumes to be challenged in the short term. At Dow Jones, the segment is expected to continue to benefit from the acquisition of Oil Price Information Service (OPIS) and Chemical Market Analytics (CMA). At News Media, ongoing inflationary cost pressures, especially on newsprint prices, are expected to be balanced by targeted cost initiatives.

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We forecast News Corp’s Revenues to be $10 billion for the fiscal year 2023, down 4% y-o-y. Looking at the bottom line, we now forecast earnings per share to come in at 44 cents. Given the changes to our revenues and EPS forecast, we have revised News Corp’s Valuation to $18 per share, based on a $0.44 expected EPS and a 41.0x P/E multiple for the fiscal year 2023 – almost in line with the current market price. That said, the company’s stock appears appropriately priced at the current price.

NWSA has been engaged in discussions with CoStar about a potential sale of Move.  Move is a leading provider of digital real estate services in the U.S. and primarily operates Realtor.com, a premier real estate information, advertising, and services platform. In relation to the potential sale of Move, the company can expect to see some additional one-time transaction costs in the third quarter.

It is helpful to see how its peers stack up. Check out how News Corp’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Apr 2023
MTD [1]
YTD [1]
Total [2]
 NWSA Return 2% -3% 54%
 S&P 500 Return 1% 8% 85%
 Trefis Multi-Strategy Portfolio 1% 9% 245%

[1] Month-to-date and year-to-date as of 4/14/2023
[2] Cumulative total returns since the end of 2016

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