Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+ . The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, NWSA has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, NWSA's share price has jumped by 48.75%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- NEWS CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NEWS CORP reported lower earnings of $0.44 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $0.44).
- 37.50% is the gross profit margin for NEWS CORP which we consider to be strong. Regardless of NWSA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NWSA's net profit margin of -18.60% significantly underperformed when compared to the industry average.
- NWSA, with its decline in revenue, underperformed when compared the industry average of 10.4%. Since the same quarter one year prior, revenues slightly dropped by 6.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
News Corporation operates as a diversified media company worldwide. The company has a P/E ratio of 53.2, equal to the average media industry P/E ratio and above the S&P 500 P/E ratio of 17.7. News has a market cap of $39.17 billion and is part of the
industry. Shares are up 40.2% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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