Summary
- Fox's current valuation does not reflect the value of the Brand.
- The company is financially healthy and has the potential to deliver increased growth and dividend.
- By industry multiples, the company could be worth upwards of $50.
Thesis Summary
Following the Disney Company (DIS) deal, Fox Corporation (FOX) has been left with a series of valuable assets and little debt.
I believe FOX has the potential to create significant cash-flows and generate value for investors beyond what the price reflects.
My current target price for the stock is $55.
The aftermath of the Disney deal
Fox Corporation rrecently sold the majority of its assets to The Walt Disney Company in a $71 billion deal. Out of this merger/acquisition, the assets left were spun off into Fox Corporation, which went public on the 19th of March 2019. The IPO was set at $50/share which has since declined to around $35 as of today. The company trades under the tickers FOX and FOXA, with the only difference between the shares being the voting rights of the latter.
In the deal with Disney, FOX let go of most of its entertainment assets, while holding on to Fox News network, FOX broadcast network, and major-market TV stations, as well as the national sports cable networks.
In today’s article, we will review the latest quarterly report issued by FOX and I will put forth my arguments in support of why I believe the stock is undervalued.
1. A quick review of FOX
In this section, we will review what FOX’s current balance sheet and income statement. we will break down the revenue and assess to the health of the company with some ratios
Revenue breakdown
Here is a breakdown of the revenue for the nine months ending September 2019.
