Fox Corp (FOX, Financial) experienced a -1.57% loss on November 07, 2023, with a 3-month loss of -6.31%. Despite these figures, the company's Earnings Per Share (EPS) stands at 2.04. So, is the stock modestly undervalued? To answer this question, we delve into a comprehensive valuation analysis of Fox (FOX). Keep reading to discover the intrinsic value of Fox's stock.
A Glimpse into Fox Corp (FOX, Financial)
Fox represents the assets not sold to Disney by predecessor firm, Twenty First Century Fox, in 2019. The Murdoch family continues to control the successor firm, which represents a large-scale bet on the value of live sports and news in the U.S. market. The company's current stock price is $28.87, with a market cap of $14.50 billion. The GF Value of the stock, a proprietary measure of its intrinsic value, stands at $38.48, indicating that the stock may be modestly undervalued.
Understanding the GF Value of Fox (FOX, Financial)
The GF Value is a unique measure of a stock's intrinsic value, calculated considering historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line represents the fair value at which the stock should ideally be traded. If the stock price is significantly above the GF Value Line, it's overvalued, and its future return is likely to be poor. Conversely, if it's significantly below the GF Value Line, it's undervalued, and its future return will likely be higher.
Based on this valuation method, Fox (FOX, Financial) appears to be modestly undervalued. The stock's current price is $28.87 per share, with a market cap of $14.50 billion. Because Fox is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
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Assessing Fox's Financial Strength
The financial strength of a company is crucial before investing in its stock. Companies with poor financial strength pose a higher risk of permanent loss. The cash-to-debt ratio and interest coverage are great ways to understand a company's financial strength. Fox has a cash-to-debt ratio of 0.47, which is worse than 63.32% of the companies in the Media - Diversified industry. The overall financial strength of Fox is 6 out of 10, indicating fair financial health.
Profitability and Growth of Fox (FOX, Financial)
Companies consistently profitable over the long term offer less risk. Fox has been profitable 8 over the past 10 years. Over the past twelve months, the company had a revenue of $14.90 billion and Earnings Per Share (EPS) of $2.04. Its operating margin is 17.04%, ranking better than 86.34% of companies in the Media - Diversified industry. The overall profitability of Fox is ranked 8 out of 10, indicating strong profitability.
Growth is a crucial factor in a company's valuation. Fox's 3-year average revenue growth rate is better than 78.86% of companies in the Media - Diversified industry. Fox's 3-year average EBITDA growth rate is 11.5%, ranking better than 60.86% of companies in the industry. Therefore, the growth of Fox is quite impressive.
ROIC vs WACC
Comparing a company's return on invested capital and the weighted cost of capital can provide insights into its profitability. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. For the past 12 months, Fox's ROIC is 11.19, and its WACC is 6.21.
Conclusion
In summary, Fox (FOX, Financial) appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 60.86% of companies in the Media - Diversified industry. To learn more about Fox stock, check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
