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News Corporation Just Beat EPS By 351%: Here's What Analysts Think Will Happen Next

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Simply Wall St
·3 min read
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News Corporation (NASDAQ:NWSA) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$2.4b, some 7.8% above estimates, and statutory earnings per share (EPS) coming in at US$0.39, 351% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on News after the latest results.

See our latest analysis for News

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Following last week's earnings report, News' ten analysts are forecasting 2021 revenues to be US$8.57b, approximately in line with the last 12 months. News is also expected to turn profitable, with statutory earnings of US$0.21 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.56b and earnings per share (EPS) of US$0.20 in 2021. So the consensus seems to have become somewhat more optimistic on News' earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.7% to US$18.21. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on News, with the most bullish analyst valuing it at US$23.00 and the most bearish at US$10.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.7%, a significant reduction from annual growth of 3.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - News is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards News following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple News analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with News .

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.