News Corporation’s Stock Moved Upwards On 3Q FY19 Results

News Corporation’s Stock Moved Upwards On 3Q FY19 Results

News Corporation (ASX: NWS) is an ASX-listed diversified media and information services company, operating on a global scale. The company has several media business across various verticals like book publishing, cable network programming in Australia, news and information services, and digital real estate services etc. Some of the companies that are in the network of News Corp are News UK, New York Post, Harper Collins Publishers etc.

Financial Performance

On 10th May 2019, the company announced its Q3FY19 results. The company posted total revenue of $2.46 billion, up 17% compared to the previous corresponding period (pcp) revenue of $2.09 billion. This reflected the consolidation of Foxtel and continued strength in the company’s book publishing vertical. The company’s HarperCollins brand delivered high profitability of 29% and 30% revenue increase from digital audio books.

The net income for the quarter stood at $23 million against the loss of $1.12 billion reported in the prior year. Due to a massive turnaround in the bottom-line figure, the earnings per share (eps) also turned from negative earnings to positive. The company reported EPS of $0.02 per share in Q3FY19 compared to the negative eps of $1.94 per share in previous corresponding period.

On the balance sheet front, the total assets of the company decreased from $16.34 billion in FY18 to $16.05 billion in the next nine months ended 31 March 2019. On the asset side, the major reduction was seen in cash and cash equivalents which reduced from $2.03 billion to $1.64 billion in the period same as stated above.

The current liabilities of the company stood at $3.67 billion for the nine months ended 31 March 2019 including current borrowing of $678 million.  On the cash flow front, the company received net cash of $661 million by operating activities, showing an improvement of $196 million compared to the prior year period.

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The investing activities led to a negative cash flow of $523 million, majorly driven by the cash outflow on capital expenditures of $417 million. This in in comparison to pcp net cash outflow from investing activities of $144 million.

The financing activities led to a cash outflow of $501 million in nine months to 31 March 2019 after accounting for $801 million on repayment of borrowings. The pcp net cash outflow from financing activities stood at $234 million. At the end of the reporting period, the company had net cash of $1.65 billion in the balance sheet.

The company’s Q2FY19 performance can be looked upon here.

Technical Outlook

The stock has recently breached its support zone of A$17.3 – A$17.28 and slipped to A$16.58. The short-term trend seems to be on a downside with major support around A$16. On the upside as long as the stock is trading below its newly found resistance of A$17.3 – A$17.28, the downtrend might continue.

Stock Performance

The company has a market capitalisation of A$9.7 billion. The 52-week high and low of the stock is A$22.62 and A$15.98 respectively. The stock closed the session at A$16.75, as of 10th May 2019. In the last one year, the stock has delivered a negative return of 26.1%, and the YTD return stands at +2.1%.


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