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Fox (FOXA) Down 6.9% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Fox (FOXA - Free Report) . Shares have lost about 6.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fox due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fox Q2 Earnings Beat Estimates, Revenues Increase Y/Y
Fox Corporation reported second-quarter fiscal 2023 adjusted earnings of 48 cents per share, which beat the Zacks Consensus Estimate by 4.35%. The figure increased 269.2% year over year.
Revenues were up 3.7% year over year to $4.6 billion, which beat the consensus mark by 1.1%.
Affiliate fees (37.2% of revenues) rose 1.4% to $1.71 billion led by 6% growth at the Television segment. Meanwhile, advertising (54.4% of revenues) increased 3.9% to $2.5 billion reflecting the impact of the FIFA Men’s World Cup and strong National Football League (NFL) results at FOX Sports, higher political advertising revenues at the FOX Television Stations and continued growth at Tubi, partially offset by the absence of Thursday Night Football.
Other revenues (8.5% of revenues) increased 13% from the year-ago quarter’s levels to $390 million, primarily driven by the impact of the consolidation of entertainment production companies at the Television segment and higher FOX Nation subscription revenues.
Top-Line Details
Cable Network Programming (35.4% of revenues) revenues moved down by 0.4% year over year to $1.63 billion. Advertising revenues dropped 0.7%, primarily due to FOX News Media, where the impact of elevated supply in the direct response marketplace was nearly offset by the broadcast of the World Cup at FOX Sports.
Revenues from Affiliate fees decreased 1.3% year over year, primarily due to contractual price increases, partially offset by the impact of net subscriber declines. Other revenues increased 6.9% on a year-over-year basis, primarily driven by higher FOX Nation subscription revenues.
Television (63.7% of revenues) revenues increased 6.3% from the year-ago quarter’s figure to $2.93 billion. Advertising revenues increased 5% year over year because of the broadcast of the World Cup, strong NFL ratings and pricing and additional broadcast windows at FOX Sports, higher political advertising revenues at the FOX Television Stations and continued growth at Tubi.
Affiliate fees increased 5.7% year over year, driven by increases in fees from third-party FOX affiliates.
Other revenues increased 25.6% year over year, primarily driven by the impact of the consolidation of entertainment production companies at FOX Entertainment.
Operating Details
In second-quarter fiscal 2023, operating expenses decreased 3.8% year over year to $3.52 billion. As a percentage of revenues, operating expenses contracted 600 basis points (bps) to 76.6%.
Selling, general & administrative (SG&A) expenses increased 17.5% year over year to $550 million. As a percentage of revenues, SG&A expenses expanded 140 bps to 11.9%.
Total adjusted EBITDA increased 71.3% year over year to $531 million. EBITDA margin expanded 460 bps to 11.5%.
Cable Network Programming EBITDA decreased 47.2% year over year to $353 million. Television EBITDA reported $256 million of adjusted EBITDA compared with a negative adjusted EBITDA of $273 million reported in the year-ago period.
Balance Sheet
As of Dec 31, 2022, Fox had $4.05 billion in cash and cash equivalents compared with $4.95 billion as of Sep 30, 2022.
Long-term debt as of Dec 31, 2022, was $7.20 billion, which remained flat sequentially.
The company has authorized an incremental stock repurchases of an additional $3 billion of the company’s Class A common stock and Class B common stock, bringing the company’s total stock repurchase authorization to $7 billion. To date, the company has repurchased $2.2 billion of its Class A common stock and $935 million of its Class B common stock.
The Company has declared a dividend of $0.25 per Class A and Class B share. This dividend is payable on Mar 29, 2023 with a record date for determining dividend entitlements of Mar 1, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Fox has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Fox (FOXA) Down 6.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Fox (FOXA - Free Report) . Shares have lost about 6.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fox due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fox Q2 Earnings Beat Estimates, Revenues Increase Y/Y
Fox Corporation reported second-quarter fiscal 2023 adjusted earnings of 48 cents per share, which beat the Zacks Consensus Estimate by 4.35%. The figure increased 269.2% year over year.
Revenues were up 3.7% year over year to $4.6 billion, which beat the consensus mark by 1.1%.
Affiliate fees (37.2% of revenues) rose 1.4% to $1.71 billion led by 6% growth at the Television segment. Meanwhile, advertising (54.4% of revenues) increased 3.9% to $2.5 billion reflecting the impact of the FIFA Men’s World Cup and strong National Football League (NFL) results at FOX Sports, higher political advertising revenues at the FOX Television Stations and continued growth at Tubi, partially offset by the absence of Thursday Night Football.
Other revenues (8.5% of revenues) increased 13% from the year-ago quarter’s levels to $390 million, primarily driven by the impact of the consolidation of entertainment production companies at the Television segment and higher FOX Nation subscription revenues.
Top-Line Details
Cable Network Programming (35.4% of revenues) revenues moved down by 0.4% year over year to $1.63 billion. Advertising revenues dropped 0.7%, primarily due to FOX News Media, where the impact of elevated supply in the direct response marketplace was nearly offset by the broadcast of the World Cup at FOX Sports.
Revenues from Affiliate fees decreased 1.3% year over year, primarily due to contractual price increases, partially offset by the impact of net subscriber declines. Other revenues increased 6.9% on a year-over-year basis, primarily driven by higher FOX Nation subscription revenues.
Television (63.7% of revenues) revenues increased 6.3% from the year-ago quarter’s figure to $2.93 billion. Advertising revenues increased 5% year over year because of the broadcast of the World Cup, strong NFL ratings and pricing and additional broadcast windows at FOX Sports, higher political advertising revenues at the FOX Television Stations and continued growth at Tubi.
Affiliate fees increased 5.7% year over year, driven by increases in fees from third-party FOX affiliates.
Other revenues increased 25.6% year over year, primarily driven by the impact of the consolidation of entertainment production companies at FOX Entertainment.
Operating Details
In second-quarter fiscal 2023, operating expenses decreased 3.8% year over year to $3.52 billion. As a percentage of revenues, operating expenses contracted 600 basis points (bps) to 76.6%.
Selling, general & administrative (SG&A) expenses increased 17.5% year over year to $550 million. As a percentage of revenues, SG&A expenses expanded 140 bps to 11.9%.
Total adjusted EBITDA increased 71.3% year over year to $531 million. EBITDA margin expanded 460 bps to 11.5%.
Cable Network Programming EBITDA decreased 47.2% year over year to $353 million. Television EBITDA reported $256 million of adjusted EBITDA compared with a negative adjusted EBITDA of $273 million reported in the year-ago period.
Balance Sheet
As of Dec 31, 2022, Fox had $4.05 billion in cash and cash equivalents compared with $4.95 billion as of Sep 30, 2022.
Long-term debt as of Dec 31, 2022, was $7.20 billion, which remained flat sequentially.
The company has authorized an incremental stock repurchases of an additional $3 billion of the company’s Class A common stock and Class B common stock, bringing the company’s total stock repurchase authorization to $7 billion. To date, the company has repurchased $2.2 billion of its Class A common stock and $935 million of its Class B common stock.
The Company has declared a dividend of $0.25 per Class A and Class B share. This dividend is payable on Mar 29, 2023 with a record date for determining dividend entitlements of Mar 1, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Fox has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.