News Corporation NWS
Verdict: Strong sell. Fair value $20.47 against a price of $29.93 on 6 Jan 2026, 32% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Industry tailwinds with growing market.
The case against: Intense competitive pressure could compress margins. In fiscal 2025, Net Income grew by 337% (from $0.27B to $1.18B) while Revenue grew only 2.4% and.... The OCF / Net Income ratio collapsed from 5.21 in 2023 and 3.37 in 2024 to just 0.83 in 2025. A....
Main risks
- Significant Revenue Decline: Revenue fell sharply from $10.38B in 2022 and has only shown a tepid recovery, resulting in a negative 3-year CAGR of -6.7%. This suggests potential structural challenges or loss of competitive positioning.
- Negative Incremental Returns on Capital: The estimated 3-year ROIIC is -9.5%, a major red flag indicating that capital invested over the last three years has destroyed value at the operating profit level. This questions the effectiveness of management's capital allocation strategy.
- Deteriorating Cash Flow: Despite a large reported Net Income for 2025, Free Cash Flow has declined from its 2022 peak of $0.85B to a TTM value of $0.58B. This divergence between earnings and cash flow is concerning and warrants deeper investigation.
- In fiscal 2025, Net Income grew by 337% (from $0.27B to $1.18B) while Revenue grew only 2.4% and...
- The OCF / Net Income ratio collapsed from 5.21 in 2023 and 3.37 in 2024 to just 0.83 in 2025. A...
- Intense competitive environment