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News Corporation (NWSA) Beats on Q1 Earnings & Revenues


Rupert Murdoch-controlled, News Corporation NWSA reported fourth straight quarter of positive earnings surprise, when it posted first-quarter fiscal 2018 results. The top line also surpassed the estimate after missing the same in the preceding quarter.

The quarter marked robust performance at Digital Real Estate Services and Cable Network Programming segments. News and Information Services and Book Publishing divisions also contributed to the results. The company has been concentrating on cost cutting and augmenting digital subscriber base to mitigate sluggish print advertising demand.

News Corporation posted adjusted earnings of 7 cents a share that outpaced the Zacks Consensus Estimate of 2 cents and improved substantially from a loss of one cent witnessed in the year-ago quarter. Including one-time items, the publisher of The Wall Street Journal reported quarterly earnings of 12 cents a share that fared far better than a loss of 3 cents delivered in the prior-year period.

News Corporation, which split from Twenty-First Century Fox, Inc. FOXA, stated that its total revenue for the reported quarter was $2,058 million, up 5% from the year-ago quarter and also came ahead of the Zacks Consensus Estimate of $1,977.7 million. The company’s adjusted revenue (excluding the impact of acquisitions, foreign currency fluctuations and divestitures) came in at $1,956 million, reflecting a year-over-year increase of 1%.

News Corporation Price, Consensus and EPS Surprise

News Corporation Price, Consensus and EPS Surprise | News Corporation Quote

Advertising revenue remained flat at $670 million, while circulation and subscription revenue increased 5% to $651 million. Consumer revenue rose 3% to $386 million, while revenue from real estate surged 18% to $203 million. Meanwhile, Other revenue soared 16% to $148 million.

News Corporation is in a transitional phase, looking to diversify revenue streams, along with expanding digital properties through product launches and accretive acquisitions. These have helped the stock to gain 25.3% so far in the year compared with the industry’s growth of 5.3%.

Segmental Performance

Revenue from the News and Information Services segment grew 2% year over year to $1,241 million in the reported quarter. Revenues at News Corp Australia and Dow Jones grew 4% and 2%, respectively, while at News UK and News America Marketing the same decreased 6% and 4%, respectively.

Advertising revenue remained flat as contributions from the buyouts of Australian Regional Media and Wireless Group, favorable foreign currency fluctuations and a modest rise in digital advertising revenue. This was offset by sluggishness in the print advertising market and lower free standing insert revenue at News America Marketing.

Circulation and subscription revenue grew 3% on account of contribution from Dow Jones and increased subscription pricing and rise in selected cover price at News Corp Australia and News UK, partly offset by fall in print volume.

Digital revenue accounted for 27% of segment revenue in the quarter under review compared with 24% in the year-ago period. Adjusted segment EBITDA surged 33% during the quarter to $69 million.

The Book Publishing segment reported revenue of $401 million, up 3% from the prior-year period. Digital sales, which constituted 21% of Consumer revenue, jumped 6% from the prior-year quarter due to increase in downloadable audio book sales. Adjusted EBITDA grew 4% to $50 million.

Revenue at the Digital Real Estate Services segment advanced 20% year over year to $271 million on the back of sustained growth witnessed across REA Group Limited (up 22%) and Move (up 15%). However, growth was partly offset by the divestiture of REA Group’s European business and the sale of Move’s TigerLead product. Adjusted EBITDA soared 38% to $91 million.

The Cable Network Programming segment’s revenue came in at $145 million, up 13% on account of the buyout of Australian News Channel Pty Ltd, rise in affiliate revenue at FOX SPORTS Australia and favorable currency impact. This was partly offset by fall in advertising revenue. Adjusted EBITDA more than doubled to $29 million.

Other Financial Aspects

News Corporation, which carries a Zacks Rank #2 (Buy), ended the quarter with cash and cash equivalents of $1,877 million, borrowings of $281 million and shareholders’ equity of 10,913 million, excluding non-controlling interest of $283 million.

Capital expenditures of $62 million were incurred during the quarter, while free cash flow available to the company was negative $60 million.

2 Stocks Seeking Your Attention

World Wrestling Entertainment, Inc. WWE delivered an average positive earnings surprise of 7.4% in the trailing four quarters. The company has a long-term earnings growth rate of 20% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IMAX Corporation IMAX delivered an average positive earnings surprise of 41.3% in the trailing four quarters. It has a long-term earnings growth rate of 22.7% and carries a Zacks Rank #2.

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