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A Look at 21st Century Fox’s Valuation Metrics

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Valuation metrics

21st Century Fox (FOXA) had a market cap of $51.1 billion, and its stock closed at $27.95 on July 6, 2017. 

In comparison, its peers Comcast (CMCSA), Time Warner (TWX), and The Walt Disney Company (DIS) had market caps of $1.8 billion, $78.7 billion, and $1.6 billion, respectively, on the day.

Valuation metrics include price-based multiples and enterprise value–based multiples. 21st Century Fox had an enterprise value of $67.5 billion as of July 6. The company has a forward EV-to-EBITDA (enterprise value-to-earnings before interest, tax, depreciation, and amortization) multiple of 8.9x, while its peers Comcast, Time Warner, and Disney have EV-to-EBITDA multiples of 8.1x, 10.6x, and 9.7x, respectively.

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21st Century Fox appears to be undervalued on a PE basis

21st Century Fox has a PE (price-to-earnings multiple) of 17.01x. In contrast, Disney, Comcast, and Time Warner have PEs of 18.1x, 19.9x, and 19.2x, respectively. 21st Century Fox appears to be undervalued in comparison to its peers on a PE basis.

21st Century Fox’s value proposition

With its acquisition of Sky, 21st Century Fox appears to be eyeing expansion in the international market, especially considering the popularity of Sky in Europe and the United Kingdom (EWU). The company is also trying to take advantage of viewers’ increasing preference for viewing content online by licensing its content to online television services in the United States (SPY) and internationally.

While the company remains optimistic about the growth in its affiliate fees, it does expect its advertising revenue to be negatively affected by exchange rate fluctuations in international markets.

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