News (NWSA:NAS) Fundamental Valuation Report

Fundamental Valuation Report

News(NWSA:NAS)

Communication Services:Broadcasting

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$14.95 (USD) 09/04/2020

Weighted Valuation
$14.79 (USD)

Overall Rating
Fairly valued to slightly Overvalued by 1.1%

Valuation Models Comparables: $16.31 (USD)
Multiples: $12.51 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $16.65 this stock is Undervalued

Company Overview (NWSA:NAS USD)

Price 14.95
Range 14.66 – 15.39
52 week 8.18 – 15.33
Open 15.26
Vol / Avg. 2.38M/2.24M
Mkt cap 8.79B
P/E 51.23
Div/yield 0.20/0.01
EPS -2.16
Shares 588.62M
Beta 1.54

Company Description

News Corp is a media conglomerate with large presence in the U.S, the U.K., and Australia. Key brands include The Wall Street Journal, Herald Sun, and The Times. The company also has a strong presence in the Australian pay-TV market through Fox Sports and Foxtel (both 65%-owned), while its 62%-owned REA Group is the dominant real estate classified business in Australia. In addition, it owns HarperCollins, one of the largest book publishers globally, and also has a substantial digital property advertising business (Move) in the U.S.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for NWSA:NAS

Using a discounted cash flow model we generated an intrinsic value of $29.06 (USD) for NWSA:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

NWSA:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $29.06 1% 5% 1% 5%
WACC (or Ke) 8.82 $35.29 $24.66
Terminal Growth Rate 3.00 $25.12 $34.64
Tax Rate 0.27 $31.00 $27.12
Cash Flow 1,421,400,000 $27.70 $30.42
Capital Expenditures 77,000,000 $29.13 $28.99
Long Term Debt 377,000,000 $29.09 $29.03

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $10.44 (USD) for NWSA:NAS. We also generated a valuation of $16.31 (USD) using other metrics and comparables.
The comparable companies were Liberty Formula One Group (FWONK:NAS), Nexstar Media Group (NXST:NAS), Liberty SiriusXM Gr (LSXMK:NAS), Sinclair Broadcast Group (SBGI:NAS) and Fox (FOX:NAS).

Company NWSA:NAS End Date Value
Earnings/Share ($2.16) (USD)
Book Value/Share $12.88 (USD)
Sales/Share $15.32 (USD)
Cash Flow/Share $1.33 (USD)
EBITDA/Share ($1.45) (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0.0
$18.58 (USD) -90.3
$36.05 (USD) -41.0
$2.33 (USD) 24.3
$0.00 (USD) -1.6
NWSA:NAS Ratios Used Average Values FWONK:NAS NXST:NAS LSXMK:NAS SBGI:NAS FOX:NAS
0.00 PE Ratio 16.17 0.00 12.48 30.06 5.00 17.14
1.16 PB Ratio 1.44 1.33 1.99 1.27 0.97 1.66
0.98 PS Ratio 2.35 7.34 1.16 1.54 0.33 1.39
11.27 PCF Ratio 5.00 0.00 4.87 6.09 1.82 7.23
0.00 EV to EBITDA 8.96 0.00 7.91 13.10 4.97 9.87

Multiples

Using a multiples approach we generated a valuation of  $12.51 (USD) for NWSA:NAS

Company NWSA:NAS End Date Value
Earnings/Share ($2.16) (USD)
Book Value/Share $12.88 (USD)
Sales/Share $15.32 (USD)
Cash Flow/Share $1.33 (USD)
EBITDA/Share ($1.45) (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$9.95 (USD) 0
$13.24 (USD) 0
$14.32 (USD) 0
$0.00 (USD) 0
Ratios Ratio Average
PE Ratio 50.75
PB Ratio 0.77
PS Ratio 0.86
PCF Ratio 10.79
EV to EBITDA 7.10

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  NWSA:NAS for the last 7 years was  0.75

We ran the Adjusted Book Value for  NWSA:NAS and generated a book value of  $12.88 (USD)
By multiplying these we get an adjusted valuation of  $9.64 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for NWSA:NAS. The 1 analysts have a concensus valuation for NWSA:NAS for 2021 of $16.65 (USD).

NWSA:NAS News

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 2 0 3.6667 Outperform 2020-9-3

Current Price: 14.95 USD

Analyst Consensus
USD Millions 2021 2022 2023
Mean EPS 0.25 0.54 0.72
# EPS Analysts 3 3 1
Mean Revenue 8,139.40 8,450.90 8,798.70
# Revenue Analysts 2 2 1
Mean Target Price 16.65
Mean Cash Flow 1.50 1.73 1.94
Mean EBITDA 1,004.60 1,220.30 1,380.00
Mean Net Income 144.80 315.40 411.80
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure 522.20 503.80 486.10

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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