FOX has had an impressive run over the past six months. While the S&P 500 has been flat, the stock has returned 35.6% and now trades at $52.77. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is there a buying opportunity in FOX, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
We’re glad investors have benefited from the price increase, but we're swiping left on FOX for now. Here are two reasons why there are better opportunities than FOXA and a stock we'd rather own.
Why Is FOX Not Exciting?
Founded in 1915, Fox (NASDAQ: FOXA) is a diversified media company, operating prominent cable news, television broadcasting, and digital media platforms.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, FOX’s 5.3% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector.
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect FOX’s revenue to rise by 4.2%, close to its 3.1% annualized growth for the past two years. This projection doesn't excite us and indicates its newer products and services will not accelerate its top-line performance yet.
Final Judgment
FOX isn’t a terrible business, but it doesn’t pass our quality test. With its shares topping the market in recent months, the stock trades at 13.7× forward price-to-earnings (or $52.77 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. We’d suggest looking at one of our top digital advertising picks.
Stocks We Would Buy Instead of FOX
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