Why 21st Century Fox (FOXA) Is Up Today

NEW YORK (TheStreet) -- 21st Century Fox (FOXA) was gaining 1% to $34.70 Monday after hedge fund ValueAct took a $1 billion stake in the company, according to CNBC.

The hedge fund reportedly built its position in the media company when it was looking to acquire Time Warner (TWX). 21st Century Fox recently withdrew its $80 billion bid for the competitor media company.

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TheStreet Ratings team rates TWENTY-FIRST CENTURY FOX INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TWENTY-FIRST CENTURY FOX INC (FOXA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, good cash flow from operations, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FOXA's revenue growth has slightly outpaced the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 16.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 369.3% when compared to the same quarter one year prior, rising from -$371.00 million to $999.00 million.
  • Net operating cash flow has significantly increased by 212.91% to $1,346.00 million when compared to the same quarter last year. In addition, TWENTY-FIRST CENTURY FOX INC has also vastly surpassed the industry average cash flow growth rate of 13.60%.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: FOXA Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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