Yahoo Finance Results: Fox Corporation Confounded Analyst Expectations With A Surprise Profit
Fox Corporation (NASDAQ:FOXA) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Fox beat expectations by 3.7% with revenues of US$3.8b. It also surprised on the earnings front, with an unexpected statutory profit of US$0.48 per share a nice improvement on the losses that analysts forecast. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
View our latest analysis for Fox
Taking into account the latest results, the current consensus from Fox's 18 analysts is for revenues of US$12.5b in 2020, which would reflect a credible 6.5% increase on its sales over the past 12 months. Statutory earnings per share are forecast to decrease 7.1% to US$2.67 in the same period. Before this earnings report, analysts had been forecasting revenues of US$12.3b and earnings per share (EPS) of US$2.31 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.
The consensus price target was unchanged at US$39.19, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Fox analyst has a price target of US$48.00 per share, while the most pessimistic values it at US$28.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Next year brings more of the same, according to analysts, with revenue forecast to grow 6.5%, in line with its 6.6% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.0% per year. So it's pretty clear that Fox is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Fox following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Fox's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$39.19, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Fox going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Fox's balance sheet, and whether we think Fox is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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