Yahoo Finance Fox (FOXA) Up 6.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Fox (FOXA). Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fox due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fox Q3 Earnings Beat Estimates, Revenues Increase Y/Y
Fox Corporation reported third-quarter fiscal 2023 adjusted earnings of 94 cents per share, which beat the Zacks Consensus Estimate by 6.82%. The figure increased 16% year over year.
Revenues were up 18.2% year over year to $4.08 billion, which beat the consensus mark by 0.92%.
Affiliate fees (45.5% of revenues) rose 3.3% to $1.86 billion, with 9% growth in the Television segment.
Advertising (45.9% of revenues) jumped 43.5% year over year to $1.88 billion. Top-line growth benefited from the positive impact of Super Bowl LVII, a higher volume of NFL games and continued growth at Tubi.
Other revenues (8.6% of revenues) inched up 0.3% year over year to $352 million.
Top-Line Details
Cable Network Programming (38.4% of revenues) revenues moved down by 0.8% year over year to $1.57 billion. Advertising revenues dropped 6.8%, whereas revenues from Affiliate fees decreased 0.4% year over year. Other revenues increased 9.5% on a year-over-year basis.
Television (60.6% of revenues) revenues jumped 36% from the year-ago quarter’s figure to $2.48 billion. Advertising revenues soared 60.9% year over year. Affiliate fees increased 9.1% year over year. Other revenues increased 0.7% year over year.
Operating Details
In third-quarter fiscal 2023, operating expenses jumped 26% year over year to $2.73 billion. As a percentage of revenues, operating expenses increased 410 basis points (bps) to 66.8%.
Expenses increased due to higher programming rights amortization and production costs at FOX Sports driven by the broadcast of Super Bowl LVII and a higher volume of NFL games. Higher digital investment at Tubi also drove expense growth.
Selling, general & administrative (SG&A) expenses increased 8.9% year over year to $528 million. As a percentage of revenues, SG&A expenses declined 110 bps to 12.9%.
Total adjusted EBITDA increased 2.7% year over year to $833 million. Adjusted EBITDA margin contracted 310 bps to 20.4%.
Cable Network Programming EBITDA decreased 8.3% year over year to $792 million. Television EBITDA reported $117 million of adjusted EBITDA compared with adjusted EBITDA of $35 million reported in the year-ago period.
Balance Sheet
As of Mar 31, 2023, Fox had $4.15 billion in cash and cash equivalents compared with $4.05 billion as of Dec 31, 2022.
Long-term debt, as of Mar 31, 2023, was $7.21 billion, slightly higher than $7.20 billion as of Dec 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -10.13% due to these changes.
VGM Scores
At this time, Fox has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Fox is part of the Zacks Broadcast Radio and Television industry. Over the past month, Roku (ROKU), a stock from the same industry, has gained 21.6%. The company reported its results for the quarter ended March 2023 more than a month ago.
Roku reported revenues of $740.99 million in the last reported quarter, representing a year-over-year change of +1%. EPS of -$1.38 for the same period compares with -$0.19 a year ago.
For the current quarter, Roku is expected to post a loss of $1.28 per share, indicating a change of -56.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Roku. Also, the stock has a VGM Score of C.
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