News Corp Faces Revenue Growth Challenges Amid Market Pressure

News Corp struggles with stagnant revenue growth and low ROIC, raising concerns for investors. Analysts predict only modest revenue growth for the company ahead. Investors are urged to consider better alternatives.

Date: 09-01-2025

AI Rating: 4

Overview of News Corp’s Performance
News Corp (NASDAQ:NWSA) has displayed disappointing performance with a small loss of 0.9% in recent months, significantly lagging behind the S&P 500’s increase of 6.1%. The company's stock has remained stable at $27.47, but its stagnant revenue growth raises red flags for potential investors.

Revenue Growth
The report highlights that News Corp's long-term revenue growth has been virtually flat, contributing to a lack of confidence in the company. With $10.16 billion in sales over the trailing 12 months being comparable to revenue five years ago, this stagnation underscores poor business quality and presents a challenge for future valuations. This is a crucial element for investors to consider, as failing to meet revenue growth benchmarks typically reflects on the company’s overall health.

Return on Invested Capital (ROIC)
The analysis indicates a low five-year average ROIC of 5.6% for News Corp, especially when juxtaposed against leading consumer discretionary companies yielding around 25%. A low ROIC suggests that the company's capital allocation has not effectively translated into profitable growth, deterring potential investors who seek efficient and productive investment strategies.

Projected Revenue Growth
Wall Street analysts expect only a 3.9% revenue increase for News Corp over the next 12 months. This prediction, while somewhat optimistic, remains below the sector's average, highlighting a lack of confidence in the company's ability to innovate or meet market demands effectively. Investors could interpret this low projection as an underwhelming outlook, limiting enthusiasm for investment.

Valuation Insights
Currently, with shares trading at a forward EV-to-EBITDA ratio of 9× and priced at $27.47, the analysis suggests there is significant optimism priced into the stock, warranting caution from potential buyers. Analysts believe that better investment opportunities exist elsewhere, specifically recommending Wingstop as an alternative for investors looking for growth potential as the market shifts towards a bullish phase.

Stocks: NWSA WING