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In a world littered with unchecked news, commentary and opinion that flows like Niagara Falls into our everyday lives, I think that the average individual is looking for real guidance and clarity amidst the confusion. At the very least, consumers want an information source that they trust to be fair, knowledgeable and one that elucidates the boundaries between fact and fiction. (Of course some will argue may point with NWS)
“Old media” companies like News Corp are reinventing themselves in our digital age. Zacks saw this change a while back and moved NWS to a number 1 Rank (Buy).
News Corp is just about everywhere we get information and entertainment. The stock has been reaching new heights over the past several months. It may be a stock to watch as it gains momentum.
News Corporation's diversified global operations include the production and distribution of motion pictures and television programming; television, satellite and cable broadcasting such as the Fox, FX and Speed networks; the publication of newspapers, magazines, books including the Wall Street Journal, The New York Post, Dow Jones and more. They have over 150 news brands alone.
Negative news swept the company in August of last year, sending shares lower by over 28% to a low of around $13.89. Since then the company has been barreling back, cutting publishing costs and improving their income streams.
Financial Profile & Earnings Estimates
NewsCorp is trading at about 15 times earnings, with a forward p/e projection of 13.31 a year from now. Last quarter, they reported 2.7 billion in income (33.9 billion in revs) up 7.9% year over year. NWS surprised estimates the past two quarters by 20.69% and 10.34% respectively.
Their fiscal year ends in June, with expectations for 20.6% earnings growth in 2012 and 21.5% in 2013.
FY2012 earnings estimates have been steady at 1.39 since October of 2011 and are up .11 from the beginning of 2011. NWS is expected to earn 1.66 in 2013. At a 14 multiple (about low-average for the S&P 500) you have a $23.25 stock. 14 would be a very low multiple for NWS, which has been trading above a 15 p/e for the better part of the past 2 years.
Since reaching that low point in August, NWS has soared 36%. Even amidst all the mess in the markets, NWS has been maintaining its upward trend and today broke out of its technical resistance and 52 week high of $19.00, a very bullish sign.
On the chart, you can see shares have been rallying since August. The breakout today may give NWS a 5% boost. Look for the $19.00 level to become support. Look for $18.00 as your support level below that. For now, the stock continues to make higher lows and higher highs, which is indicative of a momentum stock in a bullish pattern.
Jared A Levy is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.
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