In a move to enhance shareholder value, News Corp (NASDAQ:NWSA) has announced an update to its stock repurchase program, as detailed in a recent filing with the U.S. Securities and Exchange Commission.
The multinational media company, currently valued at $16.16 billion by market capitalization, is now authorized to repurchase up to $1 billion worth of its Class A common stock and Class B common stock over time. With shares trading at $27.50, InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value.
The company's announcement, made public on Thursday, comes as part of its ongoing efforts to manage its capital allocation strategy. Under the rules of the Australian Securities Exchange (ASX), News Corp is required to report any transactions related to the repurchase program on a daily basis. Moreover, the company provides information about the program in its quarterly and annual reports.
News Corp's decision to repurchase its shares reflects management's confidence in the company's financial strength and future prospects, supported by a healthy EBITDA of $1.27 billion and strong free cash flow of $750 million. The repurchase program is subject to market conditions, applicable laws, and other investment opportunities, which may affect the timing and amount of share repurchases.
According to InvestingPro's comprehensive analysis, News Corp maintains a GOOD financial health score, with particularly strong marks in price momentum and cash flow metrics. Get access to dozens more ProTips and detailed financial insights with an InvestingPro subscription.
The company's filing included forward-looking statements regarding its intention to repurchase shares from time to time. However, these statements are based on current expectations and are subject to change based on various factors, including market prices, general market conditions, and regulatory considerations.
Investors and analysts will be monitoring the impact of this repurchase program on the company's stock performance and capital structure. The stock has shown strong momentum with an 18.01% return over the past year, while analysts maintain a bullish stance with price targets ranging from $24.14 to $41.00.
As with any share repurchase initiative, the potential reduction in outstanding shares could result in an increase in earnings per share and return on equity, depending on the execution of the program. Dive deeper into News Corp's valuation metrics and growth potential with a Pro Research Report, available exclusively on InvestingPro.
The details of the repurchase program, including the forward-looking statements, are included in Exhibits 99.1 and 99.2 of the SEC filing. News Corp, incorporated in Delaware and headquartered in New York, operates in the newspaper publishing and printing industry under the SIC code 2711.
This report is based on statements from a press release and should not be seen as an endorsement of the company's strategies or an indication of future performance. News Corp's stock is traded on the Nasdaq Global Select Market under the symbols NWSA (Class A shares) and NWS (Class B shares).
In other recent news, News Corp's recent financial performance indicated a 3% year-over-year increase in revenue to $2.58 billion and a 14% improvement in profitability to $415 million. However, News Media revenues experienced a 5% decline to $521 million. Despite this, analysts from InvestingPro maintain a positive outlook on News Corporation's financial health, endorsing the continuation of the stock buyback strategy.
Citi analysts recently initiated coverage on News Corp, issuing a Buy rating and establishing a $36.00 price target. They anticipate strategic moves by the company's management, including the potential expansion of its ownership stake in REA Group Limited, which could significantly increase shareholder value. Loop Capital also upheld a Buy rating for the company's stock, despite lowering its price target for News Corp to $41 from $44.
In a significant recent development, News Corp sold its Australian media business, Foxtel, to sports streaming company DAZN in a $2.1 billion equity exchange deal. These developments underscore News Corp's focus on prudent capital management and dedication to delivering value to its shareholders.
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