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What Should Investors Know About News Corporation's (NASDAQ:NWSA) Earnings Trajectory?

Simply Wall St

The most recent earnings update News Corporation's (NASDAQ:NWSA) released in August 2019 showed that the company finally turned profitable after delivering negative earnings on average over the past few years. Below, I've laid out key growth figures on how market analysts view News's earnings growth trajectory over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for News

Analysts' expectations for next year seems positive, with earnings rising by a significant 52%. This high growth in earnings is expected to continue, bringing the bottom line up to US$436m by 2022.

NasdaqGS:NWSA Past and Future Earnings, August 13th 2019

Although it’s informative knowing the rate of growth each year relative to today’s figure, it may be more insightful analyzing the rate at which the company is moving on average every year. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of News's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 27%. This means that, we can expect News will grow its earnings by 27% every year for the next couple of years.

Next Steps:

For News, there are three key factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is NWSA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NWSA is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NWSA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.