NWS: Bearish Signal for News Corporation - Time for Puts?

News Corporation is a global media and information services company with operations spanning information services and news, digital real estate services, and book publishing. The 'Dow Jones' segment offers news and business information through brands like 'The Wall Street Journal', 'Barron's', and 'MarketWatch', targeting individual consumers and enterprise customers. The 'Digital Real Estate Services' segment includes 'REA Group' (with sites like 'realestate.com.au') and 'Move' (operating 'Realtor.com'), connecting consumers with properties and real estate professionals. The 'Book Publishing' segment, 'HarperCollins', publishes and distributes consumer books globally, with imprints like 'Harper', 'William Morrow', and 'Zondervan'. The 'News Media' segment includes 'News Corp Australia', 'News UK' (with 'The Sun' and 'The Times'), and the 'New York Post'. The company's strategy focuses on creating and distributing authoritative content across digital and traditional platforms, leveraging global audience scale, and focusing on product innovation to capitalize on digital consumption trends.

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NWS exhibits a clearly bearish technical outlook based on the provided data. The price has declined significantly over the past 90 days, closing most recently at $29.08, substantially below both its 50-day SMA (32.02) and 200-day SMA (32.24) which is an indication of a strong downtrend. The EMA_21 is also declining, currently at 30.66. Momentum indicators reinforce this bearish sentiment; the MACD is negative (-0.46), and the RSI is low at 41.35, indicating oversold conditions, but not enough to signal a reversal. The STOCHk is at 48.27 and STOCHd at 54.62, suggesting downward momentum. The ROC_20 is negative at -5.50, confirming the downward price movement. The ADX_14 is at 18.91, which indicates a weak trend, but the recent price action confirms the downtrend. The BBP is at 0.47, which suggests that the price is trading near the lower Bollinger Band. Given these factors, the technical indicators suggest further declines in the short to medium term.

News Corporation's MD&A presents a modestly positive outlook. For the three months ended March 31, 2025, total revenues increased by 1% to $2,009 million. For the nine months ended March 31, 2025, revenues increased 3% to $6,343 million. The revenue increases were primarily driven by the Dow Jones and Digital Real Estate Services segments. However, the News Media segment experienced a revenue decrease of $42 million for the three months and $79 million for the nine months ended March 31, 2025. Segment EBITDA increased for both the three and nine month periods, reflecting improved operational efficiency. Net cash provided by operating activities from continuing operations increased by $68 million to $789 million for the nine months ended March 31, 2025. The company sold the Foxtel Group, receiving A$592 million in cash and a minority equity interest in DAZN. The company's liquidity remains strong, with $2.1 billion in cash and cash equivalents as of March 31, 2025. The company also has $345 million remaining under its stock repurchase program.

News Corp's fiscal year 2025 earnings call projects a moderately bullish outlook, driven by strong performance in key segments. Robert Thomson highlighted a 'sterling performance sustained across the 4 quarters,' resulting in a record year for profitability. Full-year revenues increased by 2% to nearly $8.5 billion, and total segment EBITDA improved by 14% to over $1.4 billion. The Board authorized a new $1 billion stock repurchase program, signaling confidence in the company's financial position and a commitment to return capital to shareholders. Dow Jones experienced robust growth, with revenue and EBITDA rising 4% and 8%, respectively, driven by a 10% increase in Professional Information Business revenues for the fourth quarter. Digital Real Estate revenues also increased by 9% for the year, with segment EBITDA up by 18%. While Book Publishing saw softness in recent months, overall revenue increased by 3%. Lavanya Chandrashekar emphasized the company's focus on high-margin content licensing and recurring digital revenues, stating that '94% of profits were from Dow Jones and Digital Real Estate,' underscoring the company's ability to drive long-term profitable growth. The accelerated buyback program and strategic focus on core pillars suggest a positive trajectory for the stock in the near term.

NWS's financial performance presents a mixed and somewhat concerning picture. Revenue has fluctuated, starting at $2499M in Q1 2024, peaking at $2577M in both Q4 2024 and Q1 2025, then declining to $1628M in Q4 2025. The `grossProfitRatio` has been consistently at 1, except for the last quarter where it plummeted to -4.19, indicating a significant issue with cost management or revenue recognition. Operating cash flow has been volatile, with a significant drop to $32M in the latest quarter from a high of $578M in Q3 2025 and a low of -$55M in Q1 2024, raising concerns about the company's ability to generate consistent cash. Total debt has decreased from $4158M in Q1 2024 to $2866M in Q4 2025, which is a positive sign for solvency. The sharp decline in gross profit ratio and inconsistent operating cash flow, despite the decrease in total debt, suggests potential challenges for NWS in the near term.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.