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Why Is Twenty-First Century Fox (FOXA) Up 18.6% Since the Last Earnings Report?
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About a month has gone by since the last earnings report for Twenty-First Century Fox, Inc. (FOXA - Free Report) . Shares have added about 18.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
21st Century Fox Q1 Earnings & Sales Top Estimates
Twenty-First Century Fox reported better-than-expected earnings for the sixth straight quarter, when it reported first-quarter fiscal 2018 results. The company’s adjusted earnings from continuing operations came in at 49 cents, beating the Zacks Consensus Estimate by a penny. However, earnings declined 4% year over year.
Including one-time items, earnings came in at 45 cents a share compared with 44 cents reported in the prior-year quarter.
More importantly, the top line not only increased 7.6% year over year but also surpassed the Zacks Consensus Estimate for the second straight quarter. Revenues of $7,002 million came ahead of the consensus mark of $6,868 million on account of robust affiliate revenues at the Cable Network Programming and Television segments. It was also aided by increase in content revenues at the Filmed Entertainment segment.
Segment wise, Cable Network Programming revenues jumped 10.1% to $4,196 million on the back of robust affiliate as well as advertising revenue growth, which overshadowed 11% gain in costs.
Filmed Entertainment revenues were up 2.9% to $1,963 million, while Television segment net revenues increased 2.6% to $1,065 million, both on a year-over-year basis.
The company’s total segment operating income before depreciation and amortization (OIBDA) came in at $1,791 million, flat year over year. Increase in OBIDA from Cable Network Programming was offset by decline in OIBDA from Television, Film Entertainment and Other, Corporate and Eliminations.
Detailed Discussion
OIBDA at Cable Network Programming climbed 9% to $1,511 million owing to 10% increase in revenues. The increase was partially offset by 11% rise in expenses on account of increase in global sports programming costs.
OIBDA contribution from domestic rose 11% year over year due to increase in contribution form Fox News, FX Networks as well as the local sports networks.
At the domestic cable channels, affiliate revenues grew 11% owing to rise in contractual rate across all domestic brands. Domestic advertising revenues grew 3% year over year primarily due to growth at domestic sports channel.
OIBDA contribution from International cable channels were flat year over year as strong performance at STAR India was negated by dismal performance at FNG International. Affiliate revenues advanced 11% owing to increase in rates and subscribers growth at both FNG International as well as STAR India. International advertising revenues rose 10% primarily due to high double digit advertising growth at STAR India.
Filmed Entertainment’s OIBDA slumped 18% to $256 million on account of soft film studio results mainly due to worldwide decline in TV contribution.
Television segment’s OIBDA plunged 36% to $122 million on account of increase in contractual sports programming costs at the FOX Broadcast Network.
Other Financial Details
Twenty-First Century Fox ended the quarter with cash and cash equivalents of $6,901 million. Total borrowings came in at $19,849 million and shareholders’ equity, excluding non-controlling interest of $1,252 million, was $16,304 million.
Other Developments
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% stake in Sky. The buyout will strengthen its position in pay-TV network in Britain, Ireland, Austria, Germany and Italy. The deal has received go-ahead from European Commission.
As of 2016, Sky already has 21 million pay-TV subscribers and 30,000 employees. The deal will fortify Sky’s position in entertainment and sport, reinforce its adjusted earnings and free cash flow.
The acquisition has received clearance on public interest and plurality grounds in most of the markets in which Sky operates except the UK, including Austria, Germany, Italy and the Republic of Ireland.
However, Culture Secretary Karen Bradley demanded detailed review from the Competition and Markets Authority (CMA). Bradley had earlier demanded a review as the deal “potentially raises public interest concerns”. However, what came as a surprise is that she now also wants reviewers to examine the company’s commitment to broadcasting standards. The U.K.’s Office of Communications commonly known as Ofcom had no problem regarding Twenty-First Century Fox’s capability to match U.K. broadcasting criteria. Earlier, Bradley also had no concerns about the company’s commitment toward broadcasting standards. As the matter is referred for further review the company expects deal to be sealed by Jun 30, 2018.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downside. There have been five moves down in the last two months. In the past month, the consensus estimate has shifted lower by 9.3% due to these changes.
Twenty-First Century Fox, Inc. Price and Consensus
At this time, Twenty-First Century Fox's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of B on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for growth and value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Twenty-First Century Fox (FOXA) Up 18.6% Since the Last Earnings Report?
About a month has gone by since the last earnings report for Twenty-First Century Fox, Inc. (FOXA - Free Report) . Shares have added about 18.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
21st Century Fox Q1 Earnings & Sales Top Estimates
Twenty-First Century Fox reported better-than-expected earnings for the sixth straight quarter, when it reported first-quarter fiscal 2018 results. The company’s adjusted earnings from continuing operations came in at 49 cents, beating the Zacks Consensus Estimate by a penny. However, earnings declined 4% year over year.
Including one-time items, earnings came in at 45 cents a share compared with 44 cents reported in the prior-year quarter.
More importantly, the top line not only increased 7.6% year over year but also surpassed the Zacks Consensus Estimate for the second straight quarter. Revenues of $7,002 million came ahead of the consensus mark of $6,868 million on account of robust affiliate revenues at the Cable Network Programming and Television segments. It was also aided by increase in content revenues at the Filmed Entertainment segment.
Segment wise, Cable Network Programming revenues jumped 10.1% to $4,196 million on the back of robust affiliate as well as advertising revenue growth, which overshadowed 11% gain in costs.
Filmed Entertainment revenues were up 2.9% to $1,963 million, while Television segment net revenues increased 2.6% to $1,065 million, both on a year-over-year basis.
The company’s total segment operating income before depreciation and amortization (OIBDA) came in at $1,791 million, flat year over year. Increase in OBIDA from Cable Network Programming was offset by decline in OIBDA from Television, Film Entertainment and Other, Corporate and Eliminations.
Detailed Discussion
OIBDA at Cable Network Programming climbed 9% to $1,511 million owing to 10% increase in revenues. The increase was partially offset by 11% rise in expenses on account of increase in global sports programming costs.
OIBDA contribution from domestic rose 11% year over year due to increase in contribution form Fox News, FX Networks as well as the local sports networks.
At the domestic cable channels, affiliate revenues grew 11% owing to rise in contractual rate across all domestic brands. Domestic advertising revenues grew 3% year over year primarily due to growth at domestic sports channel.
OIBDA contribution from International cable channels were flat year over year as strong performance at STAR India was negated by dismal performance at FNG International. Affiliate revenues advanced 11% owing to increase in rates and subscribers growth at both FNG International as well as STAR India. International advertising revenues rose 10% primarily due to high double digit advertising growth at STAR India.
Filmed Entertainment’s OIBDA slumped 18% to $256 million on account of soft film studio results mainly due to worldwide decline in TV contribution.
Television segment’s OIBDA plunged 36% to $122 million on account of increase in contractual sports programming costs at the FOX Broadcast Network.
Other Financial Details
Twenty-First Century Fox ended the quarter with cash and cash equivalents of $6,901 million. Total borrowings came in at $19,849 million and shareholders’ equity, excluding non-controlling interest of $1,252 million, was $16,304 million.
Other Developments
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% stake in Sky. The buyout will strengthen its position in pay-TV network in Britain, Ireland, Austria, Germany and Italy. The deal has received go-ahead from European Commission.
As of 2016, Sky already has 21 million pay-TV subscribers and 30,000 employees. The deal will fortify Sky’s position in entertainment and sport, reinforce its adjusted earnings and free cash flow.
The acquisition has received clearance on public interest and plurality grounds in most of the markets in which Sky operates except the UK, including Austria, Germany, Italy and the Republic of Ireland.
However, Culture Secretary Karen Bradley demanded detailed review from the Competition and Markets Authority (CMA). Bradley had earlier demanded a review as the deal “potentially raises public interest concerns”. However, what came as a surprise is that she now also wants reviewers to examine the company’s commitment to broadcasting standards. The U.K.’s Office of Communications commonly known as Ofcom had no problem regarding Twenty-First Century Fox’s capability to match U.K. broadcasting criteria. Earlier, Bradley also had no concerns about the company’s commitment toward broadcasting standards. As the matter is referred for further review the company expects deal to be sealed by Jun 30, 2018.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downside. There have been five moves down in the last two months. In the past month, the consensus estimate has shifted lower by 9.3% due to these changes.
Twenty-First Century Fox, Inc. Price and Consensus
Twenty-First Century Fox, Inc. Price and Consensus | Twenty-First Century Fox, Inc. Quote
VGM Scores
At this time, Twenty-First Century Fox's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of B on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for growth and value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.