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Is Twenty-First Century Fox a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Twenty-First Century Fox, Inc. (FOXA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Twenty-First Century Fox has a trailing twelve months PE ratio of 13.6, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.3. If we focus on the long-term PE trend, Twenty-First Century Fox’s current PE level puts it below its midpoint over the past five years, with the number having fallen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Film and Television Production and Distribution industry’s trailing twelve months PE ratio, which stands at 15.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Twenty-First Century Fox has a P/S ratio of about 1.8. This is significantly lower than the S&P 500 average, which comes in at 3.1 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, FOXA is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Twenty-First Century Fox currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Twenty-First Century Fox a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Twenty-First Century Fox is just 1.60, which is tad lower than the industry average of 1.61. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, FOXA is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Twenty-First Century Fox might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘C’. This gives FOXA a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed. The current quarter has seen no estimates going higher in the past sixty days compared to four lower, while the full year estimate has seen three up and two down in the same time period.
As a result the current quarter consensus estimate has dropped by 12.2% in the past two months, while the full year estimate has increased by 1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Twenty-First Century Fox, Inc. Price and Consensus
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Twenty-First Century Fox is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 15% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Film and Television Production and Distribution industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Twenty-First Century Fox a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Twenty-First Century Fox, Inc. (FOXA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Twenty-First Century Fox has a trailing twelve months PE ratio of 13.6, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.3. If we focus on the long-term PE trend, Twenty-First Century Fox’s current PE level puts it below its midpoint over the past five years, with the number having fallen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Film and Television Production and Distribution industry’s trailing twelve months PE ratio, which stands at 15.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Twenty-First Century Fox has a P/S ratio of about 1.8. This is significantly lower than the S&P 500 average, which comes in at 3.1 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, FOXA is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Twenty-First Century Fox currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Twenty-First Century Fox a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Twenty-First Century Fox is just 1.60, which is tad lower than the industry average of 1.61. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, FOXA is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Twenty-First Century Fox might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘C’. This gives FOXA a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed. The current quarter has seen no estimates going higher in the past sixty days compared to four lower, while the full year estimate has seen three up and two down in the same time period.
As a result the current quarter consensus estimate has dropped by 12.2% in the past two months, while the full year estimate has increased by 1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Twenty-First Century Fox, Inc. Price and Consensus
Twenty-First Century Fox, Inc. Price and Consensus | Twenty-First Century Fox, Inc. Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Twenty-First Century Fox is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 15% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Film and Television Production and Distribution industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>