Does News Corp’s Stock Have Upside?
After a 11% decline over the last six months, at the current price of around $20 per share, we believe News Corp stock (NASDAQ: NWSA), a global, diversified media and information services company – could see gains. NWSA stock has declined from around $23 to $20 in the last six months, largely underperforming the broader indices, with the S&P declining about 7% over the same period. The stock decline during this period can be attributed to fears of a slowing economy, driven by supply chain worries, the war in Europe, and now another China shut down. However, NWSA’s recent performance, while not all strong, has been generally positive. Only revenue associated with the Subscription Video Services portion of the business came in flat during the first six months of 2021, other than that most other parts of the business fared quite well.
In the first six months of fiscal 2022, News Corp’s revenue grew 15% year-over-year to $5.2 billion, largely due to a 40% rise in the Digital Real Estate Services unit. In addition, the company’s earnings per share came in at 73 cents in the first half of 2022 compared to 45 cents last year same period. Also, News Corp amassed nearly $1 billion of total segment EBITDA, a 30% surge, in the first half of this fiscal year.
We forecast News Corp’s Revenues to be $10.4 billion for the fiscal year 2022, up 11% y-o-y. Looking at the bottom line, we now forecast revenue per share (RPS) estimate to come in at $12.99. Given the changes to our revenues and RPS forecast, we have revised News Corp’s Valuation to $29 per share, based on a $12.99 expected RPS and a 2.3x P/S multiple for the fiscal year 2022 – almost 42% higher than the current market price. That said, the company’s stock appears very cheap at the current price. NWSA’s P/S multiple has increased from 1.01x in fiscal 2018 to 2.20x in fiscal 2021. While the company’s P/S has now declined to 1.57x, there is an upside potential when the current P/S is compared to levels seen in the past years.
News Corp also continues to focus on other ways to grow. The company announced in December 2021 that it had acquired Base Chemicals, a provider of market data and analytics on chemicals. That acquisition cost the company $295 million, and it followed its larger $1.15 billion acquisition of the Oil Price Information Service in July of that year.
Here you’ll find our previous coverage of NWSA stock where you can track our view over time.
While NWSA stock looks poised for more gains in the future, 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.
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| Returns | Apr 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| NWSA Return | -8% | -8% | 78% |
| S&P 500 Return | -8% | -12% | 87% |
| Trefis Multi-Strategy Portfolio | -7% | -14% | 237% |
[1] Month-to-date and year-to-date as of 4/29/2022
[2] Cumulative total returns since the end of 2016
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