Cable news and media network Fox (NASDAQ:FOXA) reported Q4 CY2024 results beating Wall Street’s revenue expectations, with sales up 19.9% year on year to $5.08 billion. Its non-GAAP profit of $0.96 per share was 50.2% above analysts’ consensus estimates.
Is now the time to buy FOX? Find out by accessing our full research report, it’s free.
FOX (FOXA) Q4 CY2024 Highlights:
- Revenue: $5.08 billion vs analyst estimates of $4.83 billion (19.9% year-on-year growth, 5% beat)
- Adjusted EPS: $0.96 vs analyst estimates of $0.64 (50.2% beat)
- Adjusted EBITDA: $781 million vs analyst estimates of $562.4 million (15.4% margin, 38.9% beat)
- Operating Margin: 15.3%, up from 5.9% in the same quarter last year
- Free Cash Flow was -$436 million compared to -$615 million in the same quarter last year
- Market Capitalization: $23.08 billion
Company Overview
Founded in 1915, Fox (NASDAQ:FOXA) is a diversified media company, operating prominent cable news, television broadcasting, and digital media platforms.
Broadcasting
Broadcasting companies have been facing secular headwinds in the form of consumers abandoning traditional television and radio in favor of streaming services. As a result, many broadcasting companies have evolved by forming distribution agreements with major streaming platforms so they can get in on part of the action, but will these subscription revenues be as high quality and high margin as their legacy revenues? Only time will tell which of these broadcasters will survive the sea changes of technological advancement and fragmenting consumer attention.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Regrettably, FOX’s sales grew at a sluggish 5.3% compounded annual growth rate over the last five years. This fell short of our benchmark for the consumer discretionary sector and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. FOX’s recent history shows its demand slowed as its annualized revenue growth of 3.1% over the last two years is below its five-year trend. 
We can better understand the company’s revenue dynamics by analyzing its most important segments, Advertising and Affiliate, which are 47.7% and 37.4% of revenue. Over the last two years, FOX’s Advertising revenue (marketing services) averaged 1.8% year-on-year growth while its Affiliate revenue (licensing and retransmission fees) averaged 4.2% growth.
This quarter, FOX reported year-on-year revenue growth of 19.9%, and its $5.08 billion of revenue exceeded Wall Street’s estimates by 5%.
Looking ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not accelerate its top-line performance yet.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
FOX has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 10.1% over the last two years, slightly better than the broader consumer discretionary sector.
FOX burned through $436 million of cash in Q4, equivalent to a negative 8.6% margin. The company’s cash burn slowed from $615 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, indicating it is a seasonal business that must build up inventory during certain quarters.
Key Takeaways from FOX’s Q4 Results
We were impressed by how significantly FOX blew past analysts’ EPS and EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. The beats were primarily driven by strong political advertising and sports sublicensing sales. Zooming out, we think this was a good quarter with some key areas of upside. The stock traded up 4.5% to $54.26 immediately after reporting.
FOX may have had a good quarter, but does that mean you should invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.