What To Expect From News Corp’s Q3
News Corp (NASDAQ: NWSA) is scheduled to announce its third quarter fiscal 2018 results on Thursday, May 10. The company reported better-than-expected fiscal second quarter results, as both its revenue and earnings per share came in ahead of market expectations. In Q2, the company’s revenues grew 3% year-over-year (y-o-y) to $2.2 billion, primarily due to continued growth in the Digital Real Estate Service segment, a positive impact of foreign currency fluctuations and the acquisitions of Australian Regional Media (ARM) and Australian News Channel (ANC), partially offset by lower News America Marketing and print advertising revenues at the News and Information Services segment. The media company also posted negative earnings of 14 cents per share in the quarter.
Our $16 price estimate for News Corp’s stock is slightly below the current market price. We have created an Interactive Dashboard which outlines our forecasts for the company and our expectations for its Q3 2018 results. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation.
Digital Real Estate: Strong Growth Driver
The Digital Real Estate segment posted strong growth on the back of higher revenues at both REA Group and Move in the second quarter. We expect this trend to continue in the near term, and accordingly, expect the company to post strong numbers in the Digital Real Estate segment in the fiscal third quarter, including incremental revenues from the expansion into the mortgage brokerage business. However, REA could see higher cost growth in the third quarter as its listings will be impacted by the timing of Easter, which fell in the fiscal third quarter.
Future Outlook
Fox Sports Australia will face higher costs in the third quarter – an incremental AUD30 million- mostly related to the amortization of NRL rights throughout the year. In Book Publishing, News Corp expects a favorable quarter with the release of The Woman in The Window and Dear Girl in this quarter. In the News and Information segment, we expect the company to post lower overall sales during the quarter, due to a continued downtrend in the segment. In terms of the bottom line, we expect News Corp to continue focusing on fiscal discipline and maintaining strict control over its operating expenses to grow its margins. Reuters’ compiled analyst estimates forecast revenues of $2 billion in Q3 2018.
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