[Note: News Corp Fiscal Year Ends in June]
News Corp stock (NASDAQ: NWSA), a global, diversified media and information services company, is scheduled to report its fourth-quarter results on Thursday, August 10. We expect NWSA’s stock to trade lower due to revenues and earnings missing expectations in its fourth-quarter results. The traditional publishing industry is facing disruption due to digital news and information outlets. While NWSA’s pay-television operations in Fox Sports and Foxtel provide some protection from the challenges in the publishing business, they, too, face growing pressure from digital streaming alternatives.
That said, NWSA’s 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 April declined 24% as it lapped tougher prior-year comparisons at Digital Real Estate Services. At Dow Jones, the company saw an improvement in advertising in April, albeit visibility remains limited, as the prior year comparison will be further impacted by the extra week in fiscal 2022. At News Media, ongoing inflationary cost pressures, especially on newsprint prices, could negatively impact the quarter. In Book publishing in April, revenue trends were soft and consistent with industry data.
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Our forecast indicates that NWSA’s valuation is $18 per share, which is almost 10% lower than the current market price. Look at our interactive dashboard analysis on NWSA Earnings Preview: What To Expect in Q4? for more details.
(1) Revenues to be slightly below consensus estimates
Trefis estimates NWSA’s Q4 2023 revenues to be around $2.45 Bil, slightly below the consensus estimate. The third quarter saw a 2% decrease year-over-year (y-o-y) in revenue, amounting to around $2.5 billion. The gains at Dow Jones couldn’t quite make up for declines in the company’s other businesses, particularly its real estate segment. Digital Real Estate services saw 13% y-o-y drop in revenues to $363 million, impacted by the ongoing macro economic pressures on both the U.S. and the Australian housing markets. The revenue decline was primarily driven by lower residential revenues and to a lesser extent softness in financial services. We expect a similar trend to continue into the fourth quarter as well. Dow Jones posted healthy top line growth in the third quarter with revenues of $529 million, up 9% compared to the prior year. Digital revenues accounted for 79% of total revenues this quarter up three percentage points from last year. We are continuing to see very strong momentum in the professional information business with revenues rising 38% year-over-year reflecting the acquisitions of Opus and CMA coupled with strong revenues from Risk & Compliance.
(2) EPS is expected to be below consensus estimates
NWSA’s Q4 2023 earnings per share (EPS) is expected to be 8 cents per Trefis analysis, missing the consensus estimate of 9 cents. The company’s earnings per share came in at 9 cents in the third quarter of 2023 compared to 14 cents in last year’s same period. The total segment EBITDA for the quarter declined 11% y-o-y to $320 million.
(3) Stock price estimate lower than the current market price
Going by our NWSA’s Valuation, with an earnings per share estimate of around 44 cents and a P/E multiple of around 41x in fiscal 2023, this translates into a price of almost $18, which is 10% below the current market price.
It is helpful to see how its peers stack up. NWSA Peers shows how News Corp’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
What if you’re looking for a portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.
|S&P 500 Return||-2%||18%||102%|
|Trefis Multi-Strategy Portfolio||-3%||25%||301%|
 Month-to-date and year-to-date as of 8/8/2023
 Cumulative total returns since the end of 2016