21st Century Fox Is Valued At A Lower Multiple Than Just About Every Media Company

Twenty-First Century Fox Inc (NASDAQ: FOXA) reported mixed results for Q3. Bernstein’s Todd Juenger maintained an Outperform rating for the company, with a price target of $35.

21st Century Fox reported its FQ3 operating income ahead of expectations, driven mostly by Film and a little by Cable Networks, while TV missed. This enabled the company to beat net adjusted OIBDA expectations and meet EPS. Domestic affiliate fees grew 7 percent, which “might be viewed as a little light, although we're talking fractions of a percent,” analyst Todd Juenger said.

What The Near Future Holds In Store

21st Century Fox’s OIBDA is now up 4 percent year-over-year FY-to-date. If the company is able to meet the Bernstein forecast for FQ4, total FY16 OIBDA would be up 5 percent year-over-year, above the guidance of flat to low single digit growth, Juenger mentioned. He pointed out the company had not exceeded guidance for a long time.

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The analyst believes there would be a significant inflection of growth in FY17. The consensus expectation for two-year EBITDA CAGR is at 9 percent.

The analyst highlighted the fact that 21st Century Fox’s valuation was lower than that of Walt Disney Co (NYSE: DIS), Time Warner Inc (NYSE: TWX), Discovery Communications Inc. (NASDAQ: DISCA), CBS Corporation (NYSE: CBS) and Scripps Networks Interactive, Inc. (NASDAQ: SNI) – “essentially all the core U.S. Media stocks” with the exception of Viacom, Inc. (NASDAQ: VIAB) and AMC Networks Inc (NASDAQ: AMCX).

“While Fox carries gross leverage of 3x, net leverage is about a turn lower (maybe all that excess cash isn't such a bad thing after all). Finally, Fox has unique assets like Star India which are in a unique operating environment and state of development,” Juenger added.