Twenty-First Century Fox Inc Valuation – March 2018 $FOXA

Company Profile (obtained from Marketwatch): Twenty-First Century Fox, Inc. is a media company, which engages in television broadcasting and film production. It operates through the following segments: Cable Network Programming; Television; Filmed Entertainment; Direct Broadcast Satellite Television, and Other Corporate and Eliminations. The Cable Network Programming segment consists of the production and licensing of programming distributed through cable television systems and direct broadcast satellite operators. The Television segment offers broadcasting of network programming. The Filmed Entertainment offers production and acquisition of live-action and animated motion pictures for distribution and licensing in entertainment media. The Direct Broadcast Satellite Television segment involves in the distribution of basic and premium programming services via satellite and broadband directly to subscribers. The Other, Corporate and Eliminations segment comprises of corporate overhead and eliminations. The company was founded in 1979 and is headquartered in New York, NY.

FOXA Chart

FOXA data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FOXA – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $67,541,166,249 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.16 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 651.39% Pass
6. Moderate PEmg Ratio PEmg < 20 16.96 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.70 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.16 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.05 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

 

EPSmg $2.16
MG Growth Estimate 3.32%
MG Value $32.73
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $31.33
MG Value based on 0% Growth $18.37
Market Implied Growth Rate 4.23%
Current Price $36.65
% of Intrinsic Value 111.97%

Twenty-First Century Fox Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.77 in 2014 to an estimated $2.16 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.23% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Twenty-First Century Fox Inc revealed the company was trading above its Graham Number of $21.42. The company pays a dividend of $0.36 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 16.96, which was below the industry average of 35.9, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.2.

Twenty-First Century Fox Inc receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.20
Graham Number $21.42
PEmg 16.96
Current Ratio 2.16
PB Ratio 3.70
Current Dividend $0.36
Dividend Yield 0.98%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $17,402,000,000
Total Current Liabilities $8,055,000,000
Long-Term Debt $19,163,000,000
Total Assets $52,858,000,000
Intangible Assets $19,017,000,000
Total Liabilities $34,469,000,000
Shares Outstanding (Diluted Average) 1,855,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.40
Jun2017 $1.59
Jun2016 $1.42
Jun2015 $3.90
Jun2014 $1.99
Jun2013 $3.03
Jun2012 $0.47
Jun2011 $1.04
Jun2010 $0.97
Jun2009 -$1.29
Jun2008 $1.81
Jun2007 $1.14
Jun2006 $0.76
Jun2005 $0.73
Jun2004 $0.58
Jun2003 $0.31
Jun2002 -$2.74
Jun2001 -$0.56
Jun2000 $0.76
Jun1999 $0.48
Jun1998 $0.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.16
Jun2017 $2.16
Jun2016 $2.35
Jun2015 $2.57
Jun2014 $1.77
Jun2013 $1.39
Jun2012 $0.58
Jun2011 $0.66
Jun2010 $0.54
Jun2009 $0.43
Jun2008 $1.20
Jun2007 $0.83
Jun2006 $0.42
Jun2005 $0.06
Jun2004 -$0.30
Jun2003 -$0.61
Jun2002 -$0.81

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stock Picks for the Enterprising Investor – Dec 2016
5 Undervalued Stocks for Enterprising Value Investors Near Lows – September 2016
10 Undervalued Stocks for the Enterprising Investor – August 2016
10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016
14 Best Undervalued Stocks of the Week – 8/6/16

Other ModernGraham posts about related companies

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Walt Disney Co Valuation – March 2017 $DIS
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News Corp Valuation – February 2017 $NWSA
Cinemark Holdings Inc Valuation – Initial Coverage $CNK
International Speedway Corp Valuation – Initial Coverage $ISCA
Corus Entertainment Inc Valuation – Initial Coverage $TSE:CJR.B
AMC Networks Inc Valuation – December 2016 $AMCX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Twenty-First Century Fox Inc Valuation – November 2016 $FOXA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Twenty-First Century Fox Inc (FOXA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Twenty-First Century Fox, Inc. is a media and entertainment company. The Company’s segments include Cable Network Programming; Television; Filmed Entertainment, and Other, Corporate and Eliminations. The Cable Network Programming segment produces and licenses news, business news, sports, general entertainment, factual entertainment and movie programming for distribution. The Television segment is engaged in the operation of broadcast television stations and the broadcasting of network programming in the United States. The Filmed Entertainment segment is engaged in the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media, and the production and licensing of television programming around the world. The Other, Corporate and Eliminations segment consists primarily of corporate overhead and eliminations, and other businesses.

FOXA Chart

FOXA data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

moderngraham-valuation-of-foxa-november-2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $50,905,446,532 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.01 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 377.85% Pass
6. Moderate PEmg Ratio PEmg < 20 12.31 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.70 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.01 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.54 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

foxa-value-chart-november-2016

EPSmg $2.23
MG Growth Estimate 9.08%
MG Value $59.34
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $32.28
MG Value based on 0% Growth $18.92
Market Implied Growth Rate 1.90%
Current Price $27.40
% of Intrinsic Value 46.17%

Twenty-First Century Fox Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the insufficient earnings stability over the last ten years. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.39 in 2013 to an estimated $2.23 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.9% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Twenty-First Century Fox Inc revealed the company was trading above its Graham Number of $17.36. The company pays a dividend of $0.33 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 12.31, which was below the industry average of 40.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.68.

Twenty-First Century Fox Inc performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

foxa-charts-november-2016

Net Current Asset Value (NCAV) -$10.68
Graham Number $17.36
PEmg 12.31
Current Ratio 2.01
PB Ratio 3.70
Current Dividend $0.33
Dividend Yield 1.20%
Number of Consecutive Years of Dividend Growth 4

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/16/2016
Total Current Assets $14,921,000,000
Total Current Liabilities $7,422,000,000
Long-Term Debt $19,034,000,000
Total Assets $48,626,000,000
Intangible Assets $19,454,000,000
Total Liabilities $34,819,000,000
Shares Outstanding (Diluted Average) 1,863,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.80
Jun2016 $1.42
Jun2015 $3.90
Jun2014 $1.99
Jun2013 $3.03
Jun2012 $0.47
Jun2011 $1.04
Jun2010 $0.97
Jun2009 -$1.29
Jun2008 $1.81
Jun2007 $1.14
Jun2006 $0.76
Jun2005 $0.73
Jun2004 $0.58
Jun2003 $0.31
Jun2002 -$2.74
Jun2001 -$0.56
Jun2000 $0.76
Jun1999 $0.48
Jun1998 $0.57
Jun1997 $0.31

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.23
Jun2016 $2.35
Jun2015 $2.57
Jun2014 $1.77
Jun2013 $1.39
Jun2012 $0.58
Jun2011 $0.66
Jun2010 $0.54
Jun2009 $0.43
Jun2008 $1.20
Jun2007 $0.83
Jun2006 $0.42
Jun2005 $0.06
Jun2004 -$0.30
Jun2003 -$0.61
Jun2002 -$0.81
Jun2001 $0.21

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stocks for the Defensive Investor – July 2016
10 Most Undervalued Companies for the Defensive Investor – July 2016
10 Low PE Stocks for the Defensive Investor – May 2016
10 Most Undervalued Companies for the Defensive Investor – May 2016
10 Most Undervalued Companies for the Defensive Investor – February 2016

Other ModernGraham posts about related companies

Twenty-First Century Fox Inc Valuation – August 2016 $FOXA
Discovery Communications Inc Valuation – August 2016 $DISCA
Scripps Networks Valuation – July 2016 $SNI
Cablevision Systems Corp Valuation – July 2016 $CVC
Time Warner Inc Valuation – July 2016 $TWX
Comcast Corporation Valuation – June 2016 $CMCSA
Viacom Inc Valuation – June 2016 $VIAB
CBS Corporation Valuation – May 2016 $CBS
Graham Holdings Company Valuation – May 2016 $GHC
Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Twenty-First Century Fox Inc Valuation – August 2016 $FOXA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Twenty-First Century Fox Inc (FOXA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Twenty-First Century Fox, Inc. is a media and entertainment company. The Company operates through segments: Cable Network Programming, Television, Filmed Entertainment, and Other, Corporate and Eliminations. The Company produces and licenses news, business news, sports, general entertainment, factual entertainment and movie programming for distribution primarily through cable television systems, direct broadcast satellite operators, telecommunications companies and online video distributors in the United States and internationally. The Company is engaged in the operation of broadcast television stations and the broadcasting of network programming in the United States. The Company is engaged in the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media, and the production and licensing of television programming around the world.

[level-free]
FOXA Chart

FOXA data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of FOXA – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $49,304,685,186 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.89 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 344.58% Pass
6. Moderate PEmg Ratio PEmg < 20 10.78 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.38 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.89 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.62 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FOXA value chart August 2016

EPSmg $2.37
MG Growth Estimate 15.00%
MG Value $91.25
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $34.37
MG Value based on 0% Growth $20.15
Market Implied Growth Rate 1.14%
Current Price $25.55
% of Intrinsic Value 28.00%

Twenty-First Century Fox Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.58 in 2012 to an estimated $2.37 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.14% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Twenty-First Century Fox Inc revealed the company was trading above its Graham Number of $15.97. The company pays a dividend of $0.3 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 10.78, which was below the industry average of 40.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.

Twenty-First Century Fox Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

FOXA charts August 2016

Net Current Asset Value (NCAV) -$10.00
Graham Number $15.97
PEmg 10.78
Current Ratio 1.89
PB Ratio 3.38
Current Dividend $0.30
Dividend Yield 1.17%
Number of Consecutive Years of Dividend Growth 3

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $15,620,000,000
Total Current Liabilities $8,276,000,000
Long-Term Debt $19,270,000,000
Total Assets $49,248,000,000
Intangible Assets $19,439,000,000
Total Liabilities $34,777,000,000
Shares Outstanding (Diluted Average) 1,916,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.49
Jun2015 $3.90
Jun2014 $1.99
Jun2013 $3.03
Jun2012 $0.47
Jun2011 $1.04
Jun2010 $0.97
Jun2009 -$1.29
Jun2008 $1.81
Jun2007 $1.14
Jun2006 $0.76
Jun2005 $0.73
Jun2004 $0.54
Jun2003 $0.46
Jun2002 -$2.74
Jun2001 -$0.56
Jun2000 $0.76
Jun1999 $0.48
Jun1998 $0.57
Jun1997 $0.31
Jun1996 $0.25

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.37
Jun2015 $2.57
Jun2014 $1.77
Jun2013 $1.39
Jun2012 $0.58
Jun2011 $0.66
Jun2010 $0.54
Jun2009 $0.43
Jun2008 $1.19
Jun2007 $0.83
Jun2006 $0.43
Jun2005 $0.08
Jun2004 -$0.27
Jun2003 -$0.55
Jun2002 -$0.81
Jun2001 $0.21
Jun2000 $0.55

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stocks for the Defensive Investor – July 2016
10 Most Undervalued Companies for the Defensive Investor – July 2016
10 Low PE Stocks for the Defensive Investor – May 2016
10 Most Undervalued Companies for the Defensive Investor – May 2016
10 Most Undervalued Companies for the Defensive Investor – February 2016

Other ModernGraham posts about related companies

Discovery Communications Inc Valuation – August 2016 $DISCA
Scripps Networks Valuation – July 2016 $SNI
Cablevision Systems Corp Valuation – July 2016 $CVC
Time Warner Inc Valuation – July 2016 $TWX
Comcast Corporation Valuation – June 2016 $CMCSA
Viacom Inc Valuation – June 2016 $VIAB
CBS Corporation Valuation – May 2016 $CBS
Graham Holdings Company Valuation – May 2016 $GHC
Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA
Scripps Networks Interactive Inc Valuation – February 2016 Update $SNI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Twenty-First Century Fox Inc (FOXA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Twenty-First Century Fox, Inc. is a media and entertainment company. The Company operates through segments: Cable Network Programming, Television, Filmed Entertainment, and Other, Corporate and Eliminations. The Company produces and licenses news, business news, sports, general entertainment, factual entertainment and movie programming for distribution primarily through cable television systems, direct broadcast satellite operators, telecommunications companies and online video distributors in the United States and internationally. The Company is engaged in the operation of broadcast television stations and the broadcasting of network programming in the United States. The Company is engaged in the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media, and the production and licensing of television programming around the world.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of FOXA

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $53,223,079,988 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.17 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 356.02% Pass
6. Moderate PEmg Ratio PEmg < 20 10.68 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.42 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.17 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.29 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FOXA value chart February 2016

EPSmg $2.43
MG Growth Estimate 15.00%
MG Value $93.68
Opinion Undervalued
MG Value based on 3% Growth $35.28
MG Value based on 0% Growth $20.68
Market Implied Growth Rate 1.09%
Current Price $26.00
% of Intrinsic Value 27.75%

Twenty-First Century Fox Inc qualifies for both the Enterprising Investor and the more conservative Defensive Investor.  The Defensive Investor is only concerned by the insufficient earnings stability over the last ten years, and the Enterprising Investor is only concerned with the level of debt relative to the net current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.58 in 2012 to an estimated $2.43 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.09% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Stage 3: Information for Further Research

FOXA charts February 2016

Net Current Asset Value (NCAV) -$8.71
Graham Number $16.84
PEmg 10.68
Current Ratio 2.17
PB Ratio 3.42
Dividend Yield 1.15%
Number of Consecutive Years of Dividend Growth 3

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Total Current Assets $15,193,000,000
Total Current Liabilities $6,992,000,000
Long-Term Debt $18,767,000,000
Total Assets $47,997,000,000
Intangible Assets $18,777,000,000
Total Liabilities $32,716,000,000
Shares Outstanding (Diluted Average) 2,012,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.68
Jun2015 $3.90
Jun2014 $1.99
Jun2013 $3.03
Jun2012 $0.47
Jun2011 $1.04
Jun2010 $0.97
Jun2009 -$1.29
Jun2008 $1.81
Jun2007 $1.14
Jun2006 $0.76
Jun2005 $0.73
Jun2004 $0.58
Jun2003 $0.31
Jun2002 -$2.74
Jun2001 -$0.56
Jun2000 $0.76
Jun1999 $0.48
Jun1998 $0.57
Jun1997 $0.31
Jun1996 $0.25

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.43
Jun2015 $2.57
Jun2014 $1.77
Jun2013 $1.39
Jun2012 $0.58
Jun2011 $0.66
Jun2010 $0.54
Jun2009 $0.43
Jun2008 $1.20
Jun2007 $0.83
Jun2006 $0.42
Jun2005 $0.06
Jun2004 -$0.30
Jun2003 -$0.61
Jun2002 -$0.81
Jun2001 $0.21
Jun2000 $0.55

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stocks for the Defensive Investor – January 2016
10 Most Undervalued Companies for the Defensive Investor – October 2015
Twenty-First Century Fox Inc. Valuation – October 2015 Update $FOXA
10 Low PE Stocks for the Enterprising Investor – August 2015
10 Most Undervalued Companies for the Enterprising Investor – August 2015

Other ModernGraham posts about related companies

Scripps Networks Interactive Inc Valuation – February 2016 Update $SNI
Walt Disney Co Valuation – December 2015 Update $DIS
Wal-Mart Stores Inc. Valuation – November 2015 Update $WMT
CBS Corporation Valuation – November 2015 Update $CBS
Time Warner Cable Inc. Valuation – November 2015 Update $TWC
News Corporation Valuation – November 2015 Update $NWSA
The Best Companies of the Media Entertainment Industry – October 2015
Twenty-First Century Fox Inc. Valuation – October 2015 Update $FOXA
Graham Holdings Company Analysis – September 2015 Update $GHC
Scripps Networks Interactive Inc. Analysis – September 2015 Update $SNI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Twenty-First Century Fox Inc. Valuation – October 2015 Update $FOXA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – September 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Twenty-First Century Fox Inc. (FOXA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Twenty-First Century Fox, Inc. is a global media and entertainment company. The Company’s Cable Network Programming segment consists of the production and licensing of programming distributed primarily through cable television systems, direct broadcast satellite operators, telecommunication companies and online video distributors. The Television segment consists of the broadcasting of network programming in the United States and the operation of 28 full power broadcast television stations, including 10 duopolies, in the United States. The Filmed Entertainment segment consists of the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media worldwide, and the production and licensing of television programming worldwide. The Direct Broadcast Satellite Television consists of the distribution of programming services via satellite, cable, and broadband directly to subscribers in Italy, Germany and Austria.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of FOXA – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $57,353,392,684 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.39 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 356.63% Pass
6. Moderate PEmg Ratio PEmg < 20 11.85 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.46 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.39 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.86 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FOXA value Chart October 2015

EPSmg $2.44
MG Growth Estimate 15.00%
MG Value $93.81
Opinion Undervalued
MG Value based on 3% Growth $35.33
MG Value based on 0% Growth $20.71
Market Implied Growth Rate 1.68%
Current Price $28.88
% of Intrinsic Value 30.79%

Twenty-First Century Fox Inc. qualifies for the both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the insufficient earnings stability over the last ten years.  The Enterprising Investor is only concerned by the level of debt relative to the net current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.58 in 2012 to an estimated $2.44 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.68% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Twenty-First Century Fox Inc. (FOXA)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

FOXA Charts October 2015

Net Current Asset Value (NCAV) -$7.50
Graham Number $17.93
PEmg 11.85
Current Ratio 2.39
PB Ratio 3.46
Dividend Yield 0.95%
Number of Consecutive Years of Dividend Growth 3

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $17,376,000,000
Total Current Liabilities $7,262,000,000
Long-Term Debt $18,795,000,000
Total Assets $50,051,000,000
Intangible Assets $18,833,000,000
Total Liabilities $32,831,000,000
Shares Outstanding (Diluted Average) 2,061,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.69
Jun15 $3.90
Jun14 $1.99
Jun13 $3.03
Jun12 $0.47
Jun11 $1.04
Jun10 $0.97
Jun09 -$1.29
Jun08 $1.81
Jun07 $1.14
Jun06 $0.76
Jun05 $0.73
Jun04 $0.58
Jun03 $0.31
Jun02 -$2.74
Jun01 -$0.56
Jun00 $0.76
Jun99 $0.48
Jun98 $0.57
Jun97 $0.31
Jun96 $0.25

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.44
Jun15 $2.57
Jun14 $1.77
Jun13 $1.39
Jun12 $0.58
Jun11 $0.66
Jun10 $0.54
Jun09 $0.43
Jun08 $1.20
Jun07 $0.83
Jun06 $0.42
Jun05 $0.06
Jun04 -$0.30
Jun03 -$0.61
Jun02 -$0.81
Jun01 $0.21
Jun00 $0.55

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stocks for the Enterprising Investor – August 2015
10 Most Undervalued Companies for the Enterprising Investor – August 2015
10 Companies Benjamin Graham Would Invest In Today – August 2015
The 20 Best Stocks For Value Investors This Week – 7/25/15
Twenty-First Century Fox Analysis – July 2015 Update $FOXA

Other ModernGraham posts about related companies

Graham Holdings Company Analysis – September 2015 Update $GHC
Scripps Networks Interactive Inc. Analysis – September 2015 Update $SNI
AMC Networks Inc. Analysis – Initial Coverage $AMCX
CBS Corporation Analysis – August 2015 Update $CBS
Twenty-First Century Fox Analysis – July 2015 Update $FOXA
Discovery Communications Analysis – 2015 Annual Update $DISCA
CBS Corporation Quarterly Valuation – May 2015 $CBS
Twenty-First Century Fox Inc. Quarterly Valuation – April 2015 $FOXA
Time Warner Inc. Annual Valuation – 2015 $TWX
Comcast Corporation Annual Valuation – 2015 $CMCSA

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Twenty-First Century Fox Analysis – July 2015 Update $FOXA

220px-21st_Century_Fox_logo.svgTwenty-First Century Fox (FOXA) has shown strong earnings growth over the last several years, a factor that immediately attracts some investors. In addition, some analysts believe the company to be a good value based based on qualitative factors. For example, Seeking Alpha contributor Price Point wrote last month about the company’s management changes, ratings, and how such items may affect the company’s growth. These qualitative issues are excellent to consider in the final stages of an investment decision, but first one must use quantitative metrics to determine the company’s intrinsic value.

Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits.

The model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least 1/3rd over the last 10 years, using 3-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $33.56
MG Value $101.59
MG Opinion Undervalued
Value Based on 3% Growth $38.26
Value Based on 0% Growth $22.43
Market Implied Growth Rate 2.11%
Net Current Asset Value (NCAV) -$6.84
PEmg 12.72
Current Ratio 2.54
PB Ratio 3.94

Balance Sheet – March 2015

Current Assets $19,049,000,000
Current Liabilities $7,490,000,000
Total Debt $18,865,000,000
Total Assets $51,492,000,000
Intangible Assets $18,874,000,000
Total Liabilities $33,503,000,000
Outstanding Shares 2,113,000,000

Earnings Per Share

2015 (estimate) $4.11
2014 $1.99
2013 $3.03
2012 $0.47
2011 $1.04
2010 $0.97
2009 -$1.29
2008 $1.81
2007 $1.14
2006 $0.76
2005 $0.73

Earnings Per Share – ModernGraham

2015 (estimate) $2.64
2014 $1.77
2013 $1.39
2012 $0.58
2011 $0.66
2010 $0.54

Dividend History

Free Cash Flow

Competitive Comparison

Twenty-First Century Fox is rather attractive when compared to some other companies in the industry. For example, a ModernGraham valuation of Comcast Corporation (CMCSA) indicates that company is unsuitable for Defensive Investors or Enterprising Investors though it is undervalued. On the other hand, CBS Corporation (CBS) was rated as suitable for Enterprising Investors and found to be significantly undervalued as well in its most recent ModernGraham valuation.

Conclusion

Twenty-First Century Fox is not suitable for Defensive Investors but it does pass the initial requirements of the Enterprising Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the high PB ratio, while the Enterprising Investor’s only concern is the level of debt relative to the net current assets. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, it has grown its EPSmg (normalized earnings) from $0.66 in 2011 to an estimated $2.64 for 2015. This is a fairly strong level of demonstrated growth, and outpaces the market’s implied estimate for annual earnings growth of 2.11% over the next 7-10 years.

In recent years, the company’s actual growth in EPSmg has averaged nearly 60% annually, and while the ModernGraham valuation model reduces the actual growth to a more conservative figure when making an estimate, the model still returns an estimate of intrinsic value well above the current price, indicating that Twenty-First Century Fox is significantly undervalued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Twenty-First Century Fox Inc. Quarterly Valuation – April 2015 $FOXA

220px-21st_Century_Fox_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – March 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Twenty-First Century Fox Inc. (FOXA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Twenty-First Century Fox, Inc. is a global media and entertainment company. The Company’s Cable Network Programming segment consists of the production and licensing of programming distributed primarily through cable television systems, direct broadcast satellite operators, telecommunication companies and online video distributors. The Television segment consists of the broadcasting of network programming in the United States and the operation of 28 full power broadcast television stations, including 10 duopolies, in the United States. The Filmed Entertainment segment consists of the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media worldwide, and the production and licensing of television programming worldwide. The Direct Broadcast Satellite Television consists of the distribution of programming services via satellite, cable, and broadband directly to subscribers in Italy, Germany and Austria.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $34.44
MG Value $100.69
MG Opinion Undervalued
Value Based on 3% Growth $37.92
Value Based on 0% Growth $22.23
Market Implied Growth Rate 2.33%
Net Current Asset Value (NCAV) -$5.84
PEmg 13.17
Current Ratio 2.80
PB Ratio 3.74

Balance Sheet – December 2014

Current Assets $20,264,000,000
Current Liabilities $7,239,000,000
Total Debt $18,901,000,000
Total Assets $52,652,000,000
Intangible Assets $18,875,000,000
Total Liabilities $32,839,000,000
Outstanding Shares 2,152,000,000

Earnings Per Share

2015 (estimate) $4.04
2014 $1.99
2013 $3.03
2012 $0.47
2011 $1.04
2010 $0.97
2009 -$1.29
2008 $1.81
2007 $1.14
2006 $0.76
2005 $0.73

Earnings Per Share – ModernGraham

2015 (estimate) $2.62
2014 $1.77
2013 $1.39
2012 $0.58
2011 $0.66
2010 $0.54

Dividend History

Conclusion:

Twenty-First Century Fox Inc. is suitable for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned by the lack of earnings stability over the last ten years, while the Enterprising Investor’s only concern is the level of debt relative to the net current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.66 in 2011 to an estimated $2.62 for 2015.  This level of demonstrated growth is greater than the market’s implied estimate of 2.33% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of Twenty-First Century Fox Inc. (FOXA) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Twenty-First Century Fox Inc. (FOXA)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Twenty-First Century Fox Inc. (FOXA) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Twenty-First Century Fox Inc. Quarterly Valuation – January 2015 $FOXA

220px-21st_Century_Fox_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Twenty-First Century Fox Inc. (FOXA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Twenty-First Century Fox, Inc., formerly News Corporation, is a diversified global media and entertainment company. The Company operates five industry segments: Cable Network Programming, which provides news, sports, entertainment and movie programming through cable television systems, direct broadcast satellite operators, telecommunications companies and online video distributors; Television, which operates television stations and broadcasts network programs in the United States; Filmed Entertainment, which offers live-action and animated motion pictures for distribution and licensing; Direct Broadcast Satellite Television, which offers broadcast services in Italy, Germany and Austria, and Other, Corporate and Eliminations. The Company operates a global portfolio of cable, broadcast, film, pay-TV and satellite assets spanning six continents. The Company also owns BigDecisions.com platform, which provides financial decision-making tools to Indian customers.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $37.08
MG Value $69.12
MG Opinion Undervalued
Value Based on 3% Growth $26.03
Value Based on 0% Growth $15.26
Market Implied Growth Rate 6.08%
Net Current Asset Value (NCAV) -$10.70
PEmg 20.65
Current Ratio 1.63
PB Ratio 5.00

Balance Sheet – September 2014

Current Assets $14,950,000,000
Current Liabilities $9,158,000,000
Total Debt $19,395,000,000
Total Assets $54,711,000,000
Intangible Assets $25,440,000,000
Total Liabilities $38,446,000,000
Outstanding Shares 2,195,000,000

Earnings Per Share

2015 (estimate) $1.58
2014 $1.99
2013 $3.03
2012 $0.47
2011 $1.04
2010 $0.97
2009 -$1.29
2008 $1.81
2007 $1.14
2006 $0.76
2005 $0.73

Earnings Per Share – ModernGraham

2015 (estimate) $1.80
2014 $1.77
2013 $1.39
2012 $0.58
2011 $0.66
2010 $0.54

Dividend History

Conclusion:

Twenty-First Century Fox Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, lack of earnings stability over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor’s only initial concern is with the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.66 in 2011 to $1.80 for 2015.  This level of demonstrated growth is greater than the market’s implied estimate of 6.08% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of Twenty-First Century Fox Inc. (FOXA) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Twenty-First Century Fox Inc. (FOXA)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Twenty-First Century Fox Inc. (FOXA) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Twenty-First Century Fox Inc Valuation – January 2019 $FOX

Company Profile (excerpt from Reuters): Twenty-First Century Fox, Inc., incorporated on October 23, 2003, is a media and entertainment company. The Company’s segments include Cable Network Programming; Television; Filmed Entertainment, and Other, Corporate and Eliminations. The Company’s activities are conducted principally in the United States, the United Kingdom, Continental Europe, Asia and Latin America.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FOX – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $89,173,519,944 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.45 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 129.44% Pass
6. Moderate PEmg Ratio PEmg < 20 24.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.09 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.45 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.62 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.97
MG Growth Estimate -3.47%
MG Value $3.07
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $28.62
MG Value based on 0% Growth $16.78
Market Implied Growth Rate 7.95%
Current Price $48.18
% of Intrinsic Value 1569.84%

Twenty-First Century Fox Inc Class A does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.57 in 2015 to an estimated $1.97 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Twenty-First Century Fox Inc Class A revealed the company was trading above its Graham Number of $20.1. The company pays a dividend of $0.36 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 24.41, which was below the industry average of 27.83, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.22.

Twenty-First Century Fox Inc Class A scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.22
Graham Number $20.10
PEmg 24.41
Current Ratio 2.45
PB Ratio 4.09
Current Dividend $0.36
Dividend Yield 0.75%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $19,128,000,000
Total Current Liabilities $7,802,000,000
Long-Term Debt $18,379,000,000
Total Assets $54,512,000,000
Intangible Assets $18,787,000,000
Total Liabilities $32,588,000,000
Shares Outstanding (Diluted Average) 1,863,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.70
Jun2018 $2.40
Jun2017 $1.59
Jun2016 $1.42
Jun2015 $3.90
Jun2014 $1.99
Jun2013 $3.03
Jun2012 $0.47
Jun2011 $1.04
Jun2010 $0.97
Jun2009 -$1.29
Jun2008 $1.81
Jun2007 $1.14
Jun2006 $0.76
Jun2005 $0.73
Jun2004 $0.58
Jun2003 $0.31
Jun2002 -$2.74
Jun2001 -$0.56
Jun2000 $0.76
Jun1999 $0.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.97
Jun2018 $2.16
Jun2017 $2.16
Jun2016 $2.35
Jun2015 $2.57
Jun2014 $1.77
Jun2013 $1.39
Jun2012 $0.58
Jun2011 $0.66
Jun2010 $0.54
Jun2009 $0.43
Jun2008 $1.20
Jun2007 $0.83
Jun2006 $0.42
Jun2005 $0.06
Jun2004 -$0.30
Jun2003 -$0.61

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B

Company Profile (excerpt from Reuters): Corus Entertainment Inc. is a media and content company. The Company creates and delivers quality brands and content across platforms for audiences around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSX-CJR.B – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,061,764,000 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.95 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 14.45% Fail
6. Moderate PEmg Ratio PEmg < 20 4.55 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.51 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.95 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -58.35 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.89
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $12.91
MG Value based on 0% Growth $7.57
Market Implied Growth Rate -1.98%
Current Price $4.05
% of Intrinsic Value N/A

Corus Entertainment Inc. (USA) does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.79 in 2014 to an estimated $0.89 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.98% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Corus Entertainment Inc. (USA) revealed the company was trading below its Graham Number of $17.11. The company pays a dividend of $1.14 per share, for a yield of 28.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 4.55, which was below the industry average of 38.81, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.17.

Corus Entertainment Inc. (USA) receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.17
Graham Number $17.11
PEmg 4.55
Current Ratio 0.95
PB Ratio 0.51
Current Dividend $1.14
Dividend Yield 28.15%
Number of Consecutive Years of Dividend Growth 7

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Most Recent Balance Sheet Figures

Balance Sheet Information 5/1/2018
Total Current Assets $572,097,000
Total Current Liabilities $604,723,000
Long-Term Debt $1,903,577,000
Total Assets $4,968,929,000
Intangible Assets $3,960,973,000
Total Liabilities $3,319,528,000
Shares Outstanding (Diluted Average) 208,624,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.10
Aug2017 $0.95
Aug2016 $0.96
Aug2015 -$0.29
Aug2014 $1.76
Aug2013 $1.90
Aug2012 $1.78
Aug2011 $1.78
Aug2010 $1.56
Aug2009 -$0.71
Aug2008 $1.54
Aug2007 $1.24
Aug2006 $0.41
Aug2005 $0.83
Aug2004 -$0.27
Aug2003 $0.47
Aug2002 -$1.98
Aug2001 $1.53
Aug2000 $2.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.89
Aug2017 $0.88
Aug2016 $0.97
Aug2015 $1.11
Aug2014 $1.79
Aug2013 $1.62
Aug2012 $1.39
Aug2011 $1.16
Aug2010 $0.83
Aug2009 $0.53
Aug2008 $1.02
Aug2007 $0.68
Aug2006 $0.23
Aug2005 $0.13
Aug2004 $0.00
Aug2003 $0.24
Aug2002 $0.21

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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