) hit a 52-week high of $27.62 on January 11, 2013. Shares of this
Zacks Rank #2 (Buy) diversified media conglomerate have been
steadily moving higher since June 2012, and are up 46.4% over the
The stock's momentum can be attributed to a sustained increase in
its Cable Networks segment and growth at international channels, as
well as increased advertising and affiliate revenues. These factors
were on display in its fiscal first-quarter 2013 results, which
included year-over-year earnings per share growth of 34% and a
positive surprise of 13.2%.
Impressive Bottom-Line Result
On November 6, News Corp. reported fiscal first quarter 2013
earnings of 43 cents per share, beating the Zacks Consensus
Estimate of 38 cents and the prior-year result of 32 cents. Over
the past 6 quarters, the company has beaten 5 times and matched
once, amassing an average surprise of 12.4%.
Total revenue rose 2% year over year to $8,136 million on account
of revenue growth across the Cable Network Programming (up 16% to
$2,449 million) and Television (up 4% to $959 million) segments,
partially offset by lower revenues for Filmed Entertainment (down
2% to $1,745 million), Direct Broadcast Satellite Television (down
11% to $817 million) and Publishing (down 2% to $2,018 million).
The Other segment's revenue inched up 1% to $148 million. Total
revenue fell short of the Zacks Consensus Estimate of $8,226
Total segment operating income increased 3% year over year to
$1,450 million. Management anticipates a high single to low-double
digit growth rate in operating income for fiscal 2013.
Over the past 90 days, the Zacks Consensus Estimate for fiscal 2013
rose 1.2% to $1.73 per share. For fiscal 2014, the Zacks Consensus
Estimate is $2.02 per share, reflecting an increase of
approximately 1% over the same time frame.
Valuation Stretched, Yet Lucrative
News Corp. currently trades at a forward P/E of 15.90x, reflecting
a 0.3% premium to the peer group average of 15.85x. Its
price-to-book ratio of 2.43 is at a substantial premium to the peer
group average of 1.49. Given the company's compelling fundamentals,
the premium valuation is justified and well supported by its
long-term estimated EPS growth rate of 16.7% versus 5% for the peer
With respect to return on assets (ROA), the stock looks attractive.
It has a trailing 12-month ROA of 6.2%, which is substantially
higher than the peer group average of 2.9%.
The stock has been largely trading above its 200-day moving average
since December 19, 2011. It has also remained above the 50-day
moving average since November 28, 2012. Volume averages roughly
2,941K daily. The year-to-date return for the stock is 46.4%
compared with the S&P 500's return of 14.2%.
Founded in 1922 and headquartered in New York, News Corp., is a
diversified global media company operating under six reporting
segments: Cable Network Programming (which includes STAR Group
Limited); Filmed Entertainment; Television; Direct Broadcast
Satellite Television; Publishing; and Other. News Corp., which
primarily competes with Time Warner Inc. (
), has a market cap of $64.5 billion.
On June 28, 2012, News Corp. announced its decision to split into
two separate publicly traded publishing and media and entertainment
entities. The split is expected to take a year. The Publishing
Company will be composed of the publishing businesses, education
unit and the integrated marketing services business. The
Entertainment Company will include cable and television assets,
filmed entertainment, and the direct satellite broadcasting
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