A month has gone by since the last earnings report for Twenty-First Century Fox (FOXA - Free Report) . Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Twenty-First Century 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 drivers. <p>Twenty-First Century Fox reported fourth-quarter fiscal 2018 adjusted earnings of 57 cents, which beat the Zacks Consensus Estimate by 3 cents and increased 58.3% on a year-over-year basis.<br /><br />Revenues of $7.941 billion also came ahead of the consensus mark of $7.747 billion and increased 17.7% from the year-ago quarter.<br /><br />The impressive top-line figure was primarily attributable to increasing affiliate and advertising revenues from the Cable Network Programming and Television segments as well as improving content revenues at the Filmed Entertainment segment.<br /><br /><strong>Quarter Details</strong><br /><br />Segment wise, Cable Network Programming revenues (62% of total revenues) increased 13.8% to $4.926 billion. Filmed Entertainment revenues (28.9%) were up 27.3% to $2.295 billion. Television segment net revenues (14.4%) increased 13.9% on a year-over-year basis to $1.142 billion.<br /><br />On the basis of components, affiliate revenues (45%) increased 12.3% from the year-ago quarter to $3.574 billion. Advertising revenues (25.3% of total) increased 18.2% year over year to $2.011 billion. Content revenues (27.4%) increased 25.7% year over year to $2.172 billion. Other revenues (2.3%) surged 35.3% to $184 million.<br /><br />The Cable Network Programming segment gained from double-digit affiliate and advertising revenue growth. Higher pricing of domestic cable brands including Fox News and FX Networks led to an 11% year-over-year increase in domestic affiliate revenues. Domestic advertising revenues increased 1% as high pricing at Fox News and the broadcast of FIFA World Cup at FS1 was offset by lower advertising revenues at RSNs.<br /><br />However, subscriber growth for FNG International and STAR drove the 12% increase in international affiliate revenues. Broadcasting of Indian Premier League (IPL) on STAR and FNG International’s growth led to the 55% increase in international advertising revenues.<br /><br />Filmed Entertainment revenues surged on the “successful worldwide theatrical release of Deadpool 2 and successful worldwide home entertainment release of The Greatest Showman.”<br /><br />The Television segment gained from increasing retransmission consent revenues. The broadcast of the FIFA World Cup and higher entertainment pricing led to higher FOX Broadcast Network advertising revenues.<br /><br /><strong>Operating Details</strong><br /><br />The company’s total segment operating income before depreciation and amortization (OIBDA) came in at $1.909 billion, up 31.7% year over year on the back of impressive performance of the Filmed Entertainment and Cable Network Programming segments.<br /><br />As a result, OIBDA margin of 24% expanded 260 basis points on a year-over-year basis.<br /><br />OIBDA at Cable Network Programming rose 11.9% to $1.613 billion on higher revenues. The increase was partially offset by 15% rise in expenses due to “inaugural broadcasts of the IPL at STAR and FIFA World Cup at FS1.” A higher number of “original series episodes” at FX Networks also led to an increase in the programing and marketing costs.<br /><br />OIBDA contribution from domestic rose 4% year over year due to increase in contribution from all domestic brands, slightly offset by “timing related declines” at FX Network. OIBDA contribution from International cable channels jumped 53% year over year backed by high contribution from STAR and FNG International.<br /><br />Filmed Entertainment’s OIBDA increased to $289 million from ($22) million in the year-ago period. A high contribution from animated and library series and higher film studio was muted by expenses related to the Marvel Strike Force mobile game release<br /><br />Television segment’s OIBDA plunged 22.6% to $106 million pertaining to a 20% increase in expenses related to higher entertainment programing costs as well as broadcast of FIFA World Cup.<br /><br /><strong>Balance Sheet and Cash Flow</strong><br /><br />As of Jun 30, 2018, cash & cash equivalents were $7.62 billion compared with $7.32 billion as of Mar 31, 2018.<br /><br />Cash flow from operations was $4.227 billion in the quarter.<br /><br /><strong>Fiscal Year Details</strong><br /><br />Twenty-First Century Fox reported fiscal 2018 adjusted earnings of $1.97, up 2% on a year-over-year basis.<br /><br />Revenues of $30.40 billion increased 7% from the prior year.</p>
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Twenty-First Century Fox has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Twenty-First Century Fox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.