News Corp (NWS, Financial) has seen a daily gain of 4.73% and a three-month gain of 28.88%. With an Earnings Per Share (EPS) of 0.47, the question arises: is the stock fairly valued? This article provides an in-depth valuation analysis of News (NWS) to help answer this question.
Company Overview
News Corp is a diversified media conglomerate with a significant presence in the U.S, the U.K., and Australia. The company's key brands include The Wall Street Journal, Herald Sun, and The Times. It also has a strong presence in the Australian pay-TV market through Fox Sports and Foxtel (both 65%-owned), and its 61%-owned REA Group is the dominant real estate classified business in Australia. Furthermore, it owns HarperCollins, one of the largest book publishers globally, and a substantial digital property advertising business (Move) in the U.S.
With a market cap of $12.20 billion and a stock price of $21.69, we will compare this with the GF Value, an estimation of the stock's fair value, to determine if the stock is overvalued, undervalued, or fairly valued.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance. The GF Value Line on our summary page provides an overview of the fair value that the stock should be traded at.
If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher.
According to the GF Value, the stock of News (NWS, Financial) is estimated to be fairly valued. This suggests that the long-term return of its stock is likely to be close to the rate of its business growth.
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