News Corp (NASDAQ:NWSA) has confirmed the continuation of its stock repurchase program, with the company authorized to buy back up to $1 billion worth of its Class A and Class B common stock. The disclosure, required under the rules of the Australian Securities Exchange, was included in the company's recent Form 8-K filing with the SEC dated August 30, 2024.
The media conglomerate, known for its global portfolio of consumer brands in news and information services, book publishing, digital real estate services, and more, is pursuing the repurchase of its shares as part of its capital allocation strategy. The buyback program reflects the company's commitment to managing its capital prudently and delivering value to its shareholders.
The repurchase program is a common practice among public companies seeking to reduce the number of shares in circulation, potentially increasing the value of remaining shares and providing an indirect return to investors. News Corp's program is consistent with such corporate strategies, aiming to optimize its capital structure.
In other recent news, News Corporation has been actively pursuing a series of significant initiatives. The global media and information services company has recently announced that its subsidiary, REA Group Ltd, is contemplating the acquisition of the entire share capital of Rightmove (OTC:RTMVY) plc, the UK's largest property website. This potential acquisition aligns with News Corp's strategy to expand its digital real estate services.
Simultaneously, News Corp has been diligently executing its $1 billion stock repurchase program, buying back its Class A and Class B common stock. This initiative is part of a broader strategy to enhance shareholder value, although the outcomes could vary due to factors such as market conditions and legal requirements.
In the financial sphere, News Corp reported a 6% increase in revenues to approximately $2.6 billion in the fourth quarter of fiscal year 2024. The company's profitability rose by 11% to $380 million, driven largely by its diverse sectors, including book publishing, digital real estate services, and Dow Jones segments.
Morgan Stanley, in response to these developments, has updated its financial model for News Corp, leading to an increase in the stock price target from $31.00 to $35.00. However, the firm's earnings per share (EPS) estimates have been slightly reduced due to assumptions of higher minority interest and tax rates.
Despite a 5% decrease in revenues and a 38% drop in EBITDA in the News Media segment, News Corp is planning for fiscal 2025, focusing on streaming, B2B growth, and data offerings. These are recent developments for News Corp.
InvestingPro Insights
As News Corp progresses with its stock repurchase program, the company's financial health and market performance remain critical for investors. According to recent data from InvestingPro, News Corp's market capitalization stands at $16.35 billion, reflecting its significant presence in the media industry. With a Price/Earnings (P/E) ratio of 62.92, the company's stock might seem pricey compared to earnings; however, when adjusted for the last twelve months as of Q4 2024, the P/E ratio becomes more moderate at 46.34. This adjustment indicates a more favorable long-term earnings potential that investors might consider.
The company's PEG ratio, which measures the stock's price relative to its earnings growth, is at 0.79 — suggesting that the stock could be undervalued based on its earnings growth prospects. Additionally, News Corp's revenue growth has been steady, with a 2.09% increase over the last twelve months as of Q4 2024 and a more robust quarterly growth of 5.92%. This steady growth trajectory may be reassuring to investors who are considering the company's future prospects in light of the buyback program.
InvestingPro Tips highlight the importance of considering a company's revenue growth and PEG ratio when evaluating stock repurchase programs. News Corp's consistent revenue growth and a PEG ratio under 1 could signal a potentially sound investment opportunity. For further insights, InvestingPro offers numerous additional tips to help investors make informed decisions.
Investors looking to delve deeper into News Corp's financials and stock performance can explore the full set of tips on InvestingPro, which currently lists an extensive number of additional tips for comprehensive analysis.
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