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Can Twenty-First Century Fox Stock Continue Upward Movement?
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Twenty-First Century Fox, Inc. (FOXA - Free Report) has been riding high on positive earnings surprises, robust Cable Network Programming performance and shareholder friendly moves. Though these positives inspire optimism, factors like increasing costs and currency headwinds raise concerns.
Hidden Catalyst
In the past six months, the company’s shares have gained 31.7%, outpacing the Zacks categorized Movie/TV Production/Distribution industry’s increase of 19.8%. The company reported better-than-expected earnings for the third straight quarter, when it posted second-quarter fiscal 2017 results. In the reported quarter, Twenty-First Century Fox’s earnings were driven by robust advertising as well as affiliate fees at its broadcast and cable-television divisions. Television growth was aided by hosting the World Series, while cable segment benefited from the robust ratings during the presidential campaign.
The performance of Cable Network Programming, which has been magnificent in fiscal 2015 and 2016 owing to rising affiliate fees, continues to impress investors in fiscal 2017 too. In the reported quarter, Cable Network Programming revenues jumped 7.1% on the back of robust affiliate and advertising revenues growth, after increasing 10% in first-quarter fiscal 2017. Affiliate fees are the dominant source of revenue for the Cable Network segment as well as a major contributor to total revenue. In fiscal 2016, domestic and international affiliate revenues increased 8% and 3%, respectively. In fiscal 2015, revenues from Cable Network grew 12% on the back of 17% and 3% growth in affiliate fees at Domestic and International segments, respectively.
Twenty-First Century Fox continues to focus on maximizing shareholders’ return. In reported quarter, the company bought back 4.8 million shares for $132 million. At the end of the quarter, it had $3.1 billion remaining under the current share buyback program.
Rupert Murdoch’s Twenty-First Century Fox has made a “Possible Offer” to purchase remaining 61% stake in Europe’s leading pay-TV broadcaster Sky plc. The company already owns 39.1% stake in Sky. The buyout will strengthen the company’s position in pay-TV network in Britain, Ireland, Austria, Germany and Italy.
Hurdles to cross
Increase in cost at cable segment has been a worry for investors. In second-quarter fiscal 2017, cable segment expenses increased 8%, following a rise of 12% and 15% in the preceding two quarters. The rise in expenses was mostly due to elevated sports programming costs. The company expects costs at Cable Network to go up in fiscal 2017. We believe that an increase in expenses, primarily due to higher sports programming costs may hurt the company’s margins and in turn the bottom line in the coming quarters.
Even though Twenty-First Century Fox’s international presence helps to widen customer base, fluctuations in currency exchange rates can adversely impact the company’s top-line and bottom-line results.
Given the above factors, the company currently carries a Zacks Rank #3 (Hold).
Shares of Central European Media Enterprises have gained more than 29% in the past six months.
Salem Media Group has delivered positive earnings in the trailing four quarter, with an average beat of 53.8%.
Grupo Televisa has an impressive long-term earnings growth rate of 17.1%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Can Twenty-First Century Fox Stock Continue Upward Movement?
Twenty-First Century Fox, Inc. (FOXA - Free Report) has been riding high on positive earnings surprises, robust Cable Network Programming performance and shareholder friendly moves. Though these positives inspire optimism, factors like increasing costs and currency headwinds raise concerns.
Hidden Catalyst
In the past six months, the company’s shares have gained 31.7%, outpacing the Zacks categorized Movie/TV Production/Distribution industry’s increase of 19.8%. The company reported better-than-expected earnings for the third straight quarter, when it posted second-quarter fiscal 2017 results. In the reported quarter, Twenty-First Century Fox’s earnings were driven by robust advertising as well as affiliate fees at its broadcast and cable-television divisions. Television growth was aided by hosting the World Series, while cable segment benefited from the robust ratings during the presidential campaign.
The performance of Cable Network Programming, which has been magnificent in fiscal 2015 and 2016 owing to rising affiliate fees, continues to impress investors in fiscal 2017 too. In the reported quarter, Cable Network Programming revenues jumped 7.1% on the back of robust affiliate and advertising revenues growth, after increasing 10% in first-quarter fiscal 2017. Affiliate fees are the dominant source of revenue for the Cable Network segment as well as a major contributor to total revenue. In fiscal 2016, domestic and international affiliate revenues increased 8% and 3%, respectively. In fiscal 2015, revenues from Cable Network grew 12% on the back of 17% and 3% growth in affiliate fees at Domestic and International segments, respectively.
Twenty-First Century Fox continues to focus on maximizing shareholders’ return. In reported quarter, the company bought back 4.8 million shares for $132 million. At the end of the quarter, it had $3.1 billion remaining under the current share buyback program.
Rupert Murdoch’s Twenty-First Century Fox has made a “Possible Offer” to purchase remaining 61% stake in Europe’s leading pay-TV broadcaster Sky plc. The company already owns 39.1% stake in Sky. The buyout will strengthen the company’s position in pay-TV network in Britain, Ireland, Austria, Germany and Italy.
Hurdles to cross
Increase in cost at cable segment has been a worry for investors. In second-quarter fiscal 2017, cable segment expenses increased 8%, following a rise of 12% and 15% in the preceding two quarters. The rise in expenses was mostly due to elevated sports programming costs. The company expects costs at Cable Network to go up in fiscal 2017. We believe that an increase in expenses, primarily due to higher sports programming costs may hurt the company’s margins and in turn the bottom line in the coming quarters.
Even though Twenty-First Century Fox’s international presence helps to widen customer base, fluctuations in currency exchange rates can adversely impact the company’s top-line and bottom-line results.
Given the above factors, the company currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks worth considering include Central European Media Enterprises Ltd. , Salem Media Group, Inc. (SALM - Free Report) and Grupo Televisa, S.A.B. (TV - Free Report) . All these stocks hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Central European Media Enterprises have gained more than 29% in the past six months.
Salem Media Group has delivered positive earnings in the trailing four quarter, with an average beat of 53.8%.
Grupo Televisa has an impressive long-term earnings growth rate of 17.1%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>