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Does Twenty-First Century Fox Inc’s (NASDAQ:FOXA) Past Performance Indicate A Stronger Future?

When Twenty-First Century Fox Inc (NASDAQ:FOXA) released its most recent earnings update (30 June 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Twenty-First Century Fox’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not FOXA actually performed well. Below is a quick commentary on how I see FOXA has performed.

View our latest analysis for Twenty-First Century Fox

How Well Did FOXA Perform?

FOXA’s trailing twelve-month earnings (from 30 June 2018) of US$4.5b has jumped 49% compared to the previous year.

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Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -13%, indicating the rate at which FOXA is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is merely due to an industry uplift, or if Twenty-First Century Fox has seen some company-specific growth.

NasdaqGS:FOXA Income Statement Export October 15th 18
NasdaqGS:FOXA Income Statement Export October 15th 18

In terms of returns from investment, Twenty-First Century Fox has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the US Entertainment industry of 7.6%, indicating Twenty-First Century Fox has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Twenty-First Century Fox’s debt level, has declined over the past 3 years from 13% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 80% to 91% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. There could be variables that are influencing the entire industry thus the high industry growth rate over the same time frame. You should continue to research Twenty-First Century Fox to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for FOXA’s future growth? Take a look at our free research report of analyst consensus for FOXA’s outlook.

  2. Financial Health: Are FOXA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.