New York City TV broadcasting company Fox Corporation (FOXA - Get Rating) operates through three segments: Cable Network Programming; Television; and Other, Corporate, and Eliminations. Recently, FOX News International, FOXA’s international streaming service, announced its expanded distribution on Roku (ROKU), a leading TV streaming platform, commencing January 31. This will expand its availability across Chile, Costa Rica, Germany, Ireland, Mexico, Panama, and the United Kingdom.

FOXA shares have gained 25.7% in price over the past year and 10.4% over the past six months to close the last trading session at $40.10. However, the stock has been down 1.6% for the past three months. In addition, Wall Street’s $46 median price target indicates a potential 14.7% upside from its last closing price.

Fox News anchor Chris Wallace departed the network last month after 18 years and joined CNN as a weekly host on its streaming service CNN+. The host’s departure raised a question about the impact on the network as one of its most trusted journalists leaves for its fiercest competitor. Frank Sesno, former director of the School of Media and Public Affairs at George Washington University, told The Hill last month that Wallace’s exit meant that the network “lost a very important and significant part of their brand, but it may be a part of their brand that has fallen out of favor with a large part of their audience.” However, Wallace’s Sunday morning show “Fox News Sunday” has not seen a decline in the ratings so far.

Here is what could shape FOXA’s performance in the near term:

Poor Bottom line Growth

The company’s total revenues increased 12.1% year-over-year to $3.05 billion for its fiscal first quarter, ended September 30. Its adjusted EBITDA declined 8.7% from the prior-year quarter to $1.06 billion, while its adjusted net income came in at $642 million, indicating a 10.3% decline year-over-year. FOXA’s EPS decreased 5.9% year-over-year to $1.11. In addition, FOXA’s net income and EPS have declined at CAGRs of 10.1% and 8.5%, respectively, over the past three years.

Mixed Valuation

In terms of forward trailing-12-month PEG, FOXA is currently trading at 1.08x, which is 199.4% higher than the 0.36x industry average. Also, its 10.88 forward Price/Cash Flow ratio is 11.3% higher than the 9.77 industry average.

However, FOXA’s forward EV/Sales is 22% lower than the 2.38x industry average, and its forward EV/EBIT is 39.1% lower than the 15.85x industry average.

Mixed Profitability

FOXA’s 36.24% gross profit margin is 29.9% lower than the 51.66% industry average. Also, its CAPEX/Sales is 14.9% lower than the 3.73% industry average.

However, FOXA’s 15.71%, 7.53%, and 8.33% respective ROE, ROA, and ROTC compare with the 9.85%, 3.00%, and 4.42% industry averages.

POWR Ratings Reflect Uncertain Prospects

FOXA has an overall C rating, which translates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a grade of C for Value, which is consistent with its mixed valuation.

FOXA also has a C grade for Stability, in sync with its beta of 1.13.

Of the 11 stocks in the Entertainment – Broadcasters industry, FOXA is ranked #6.

Beyond what I have stated above, you can also view FOXA’s grades for Quality, Growth, Momentum, and Sentiment here.

View the top-rated stocks in the Entertainment – Broadcasters industry here.

Bottom Line

FOXA is a leading news, sports, and entertainment company. However, its bottom-line growth has been sluggish over the past few years. Moreover, its EPS is expected to decline 87.5% in its fiscal second quarter, ended December 31, 2021. The company plans to post its second-quarter earnings on Feb. 9, 2022. Although Street analysts see a potential upside in the stock, I think it could be wise to wait for some solid positive signals to invest in the stock.

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