What Do News Corp’s Earnings and Risk Factors Reveal?

News Corp (NWSA) is a global media and publishing company. Its offerings include online video streaming and digital real estate services. The company recently announced a deal to acquire data and analytics provider OPIS to enhance its Dow Jones unit.

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Let’s take a look at the company’s latest financial performance and risk factors.

News Corp’s Fiscal Q4 and Full-Year 2021 Financial Results

The company reported Fiscal 2021 fourth-quarter revenue of $2.49 billion, marking an increase of 30% year-over-year. The growth was driven by strong performances across the advertising, video streaming, digital real-estate, Dow Jones, and book publishing segments. Adjusted EPS of $0.16 compared favorably to a loss per share of $0.03 a year ago.

For Fiscal 2021, revenue rose 4% to $9.36 billion, and adjusted EPS increased to $0.67 from $0.22 in the previous year. (See News Corp stock charts on TipRanks).

News Corp’s Risk Factors

The new TipRanks Risk Factors tool shows 27 risk factors for News Corp. The company introduced three new risk factors in its Fiscal 2021 annual report.

A newly added risk under the Finance and Corporate category relates to the company’s indebtedness. The company carried $2.15 billion in outstanding debt as of June 30. It cautions investors that the terms of some of the debts could limit its ability to secure additional financing in the future. It also says servicing the debts could limit the available cash flow to fund acquisitions, capital expenditures, and working capital.

Under the Legal and Regulatory category, a new risk factor tells investors that News Corp is subject to complex and changing laws regarding data handling. It warns that failure to comply with data laws could have an adverse impact on the company’s business and financial condition.

A newly added risk factor under the Production category cautions about the potential consequences of losing key staff. News Corp says its business depends on highly skilled personnel and that competition is high for top talent in areas such as marketing, product development, and data science. The company tells investors that it cannot guarantee that it will retain its top talents or hire replacements without delays or significant costs. It warns that the loss of key staff could harm its ability to execute its business strategy.

Finance and Corporate is News Corp’s top risk category, accounting for 22% of the total risks. That is below the sector average of 38%. News Corp’s shares have gained about 28% since the beginning of 2021.

Analysts’ Take

In July, Goldman Sachs analyst Kane Hannan reiterated a Buy rating on NWSA stock with a price target of $32.45. Hannan’s price target suggests 41.15% upside potential.

Consensus among analysts is a Moderate Buy based on 1 Buy and 1 Hold. The average News Corp price target of $32.45 implies 41.15% upside potential to current levels.