AMC Entertainment Holdings, Inc. (AMC) has been the most profitable meme stock so far this year, with 2502.8% gains year-to-date. The stock has gained 325.1% over the past month. AMC shares regained their popularity when the company announced perks for its retail investors, including a free tub of popcorn and invitations to special screenings.
However, AMC’s poor financials have been a major concern for some time. And insiders have been selling AMC stock amid its rally because the company’s growth prospects look bleak. So, we think it is a highly risky investment bet now.
As the gradual reopening of the economy improves the prospects for entertainment companies, however, investors could bet on relatively stronger companies in this space. Fox Corporation’s (FOXA) and News Corporation’s (NWSA) strong financials position them well for stable returns. So, we think these stocks could be better picks than AMC.
Fox Corporation (FOXA)
Fox Corporation produces and distributes news, sports and entertainment. Its domestic brands include FOX News, FOX Sports, FOX Entertainment, and the FOX Television Stations. It operates mainly in three segments: cable network programming, television and other, and corporate and eliminations.
On May 5, FOXA acquired digital media platform Outkick Media LLC. The acquisition should further diversify FOXA’s portfolio and strengthen its position in the industry.
FOXA’s net income improved 546.7% year-over-year to $582 million in the third quarter ended March 31. The company’s net income attributable to Fox Corporation stockholders increased 638.5% year-over-year to $0.96 per share. Its cash and cash equivalents balance rose 80.4% from its year-ago value to $5.77 billion for the nine months ended March 31.
Analysts expect FOXA’s revenues to increase 3.8% year-over-year to $12.77 billion in the current year. A $2.83 consensus EPS estimate for the current year indicates a 14.1% rise from the last year. FOXA has an impressive earnings surprise history as well; it beat the consensus EPS estimates in each of the trailing four quarters. Shares of FOXA have gained 33.1% over the past year, and 29.4% year-to-date.
It is no surprise that FOXA has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has a B grade for Sentiment also. Among the 18 stocks in the Entertainment – Media Producers industry, FOXA is ranked #4.
To see additional FOXA Ratings, click here.
News Corporation (NWSA)
NWSA is a global media and information services company. It offers a wide range of media services that include digital real estate services, subscription video services, news and information services and book publishing in Australia.
On May 10, HarperCollins Publishers, a wholly owned subsidiary of NWSA, acquired the Books & Media segment of Houghton Mifflin Harcourt (HMH) for $349 million. HMH’s expertise should help HarperCollins to strengthen its position as the second largest publisher in the world. The company recently acquired Investor’s Business Daily (IBD) through its subsidiary Dow Jones.
On April 7, NWSA raised $750 million through a senior notes offering. The company plans to use the proceeds for general purposes and for acquisitions and working capital.
NWSA’s revenue increased 3% year-over-year to $2.34 billion in its fiscal third quarter, ended March 31. Its net income stood at $ 96 million, up 109.3% from the same period last year. Its EBITDA increased 23.1% from its year-ago value to $298 million. The company’s net income attributable to News Corporation stockholders per share increased 110.5% year-over-year to $0.13.
A $2.20 billion consensus revenue estimate for the current quarter, ending June 2021 indicates a 14.3% improvement from the same period last year. Analysts expect the company’s EPS to be $0.03 in the current quarter, representing a 200% rise year-over-year. Furthermore, NWSA surpassed the Street’s EPS estimates in three of the trailing four quarters. NWSA has gained 44.3% year-to-date. The stock has gained 45.9% over the past six months to close yesterday’s trading session at $25.93.
NWSA has an overall B rating, which equates to Buy in our proprietary rating system. The stock also has a B grade for Growth and Sentiment. It is ranked #3 in the Entertainment – Media Producers industry.
Beyond what we’ve stated above, we have also rated NWSA for Value, Quality, Momentum and Stability. Click here to view all NWSA Ratings.
FOXA shares were trading at $37.27 per share on Thursday afternoon, down $0.40 (-1.06%). Year-to-date, FOXA has gained 28.69%, versus a 13.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More…
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