Why Is Fox (FOXA) Down 0.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Fox (FOXA). Shares have lost about 0.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fox due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fox Q2 Earnings Beat Estimates, Ad Revenues Decline
Fox Corporation reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of 34 cents, which beat the Zacks Consensus Estimate by 240%. The figure decreased 29.2% year over year.
Revenues declined 8.1% year over year to $4.23 billion. The figure beat the consensus mark by 1.28%.
Affiliate fees (42.2% of revenues) rose 4.4% to $1.78 billion, driven by 10% growth in the Television segment.
Advertising revenues (47.3% of revenues) declined 20% year over year to $2 billion, primarily due to the absence of the FIFA Men's World Cup at FOX Sports and lower political advertising revenues at the FOX Television Stations because of the absence of the 2022 mid-term elections. The decline was due to the impact of elevated supply in the direct response marketplace, lower ratings and higher preemptions associated with breaking news coverage at FOX News Media.
Other revenues (10.5% of revenues) jumped 14.1% year over year to $445 million.
Top-Line Details
Cable Network Programming (39.2 % of revenues) revenues increased 1.6% year over year to $1.65 billion. Advertising revenues plunged 22.8%, whereas revenues from Affiliate fees rose 0.5% year over year. Other revenues surged 80% on a year-over-year basis, primarily due to higher sports sublicensing revenues at the national sports networks.
Television (60% of revenues) revenues declined 13.4% from the year-ago quarter’s figure to $2.54 billion. Advertising revenues declined 19.4% year over year. Affiliate fees increased 10.2% year over year, led by higher rates at both the company's owned and operated stations, and third-party FOX affiliates. Other revenues decreased 32.7% year over year, primarily due to lower content revenues at the entertainment production companies as a result of industry guild labor disputes.
Operating Details
In second-quarter fiscal 2024, operating expenses decreased 3.8% year over year to $3.39 billion. As a percentage of revenues, operating expenses increased 350 basis points (bps) to 80.1%. The decrease in expenses includes lower entertainment and sports programming rights amortization and production costs, led by fewer hours of original scripted programming and the absence of the Men's World Cup, partially offset by the renewed NFL contract.
Selling, general & administrative (SG&A) expenses decreased 10% year over year to $495 million. As a percentage of revenues, SG&A expenses declined 30 bps to 11.7%.
Total adjusted EBITDA decreased 34.1% year over year to $350 million. Adjusted EBITDA margin contracted 330 bps to 8.3%, primarily due to lower expenses.
Cable Network Programming EBITDA increased 59.8% year over year to $564 million. Television reported a negative adjusted EBITDA of $138 million.
Balance Sheet
As of Dec 31, 2023, Fox had $4.12 billion in cash and cash equivalents compared with $4.82 billion as of Sep 30, 2023.
Long-term debt, as of Dec 31, 2023, was $7.19 billion, lower than $7.44 billion as of Sep 30, 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Fox has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Fox Corporation (FOXA) : Free Stock Analysis Report
