Fox Corp (FOXA) Stock Analysis
Fox Corp (FOXA) Stock Analysis
Overall Grade: F (Concerning)
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Fox Corp faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 33.6% | Above industry average |
| FCF Margin | 18.4% | Strong cash generation |
| Debt/Equity | 0.6x | Moderate leverage |
Investment Thesis: Strong return on invested capital of 33.6% suggests durable competitive advantages and efficient capital allocation.
What is Fox Corp's Profitability and ROIC?
Fox Corp generates strong returns on invested capital at 33.6%, indicating efficient capital allocation and competitive advantages. Gross margin of 100.0% with operating margin at 35.5% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 33.6% | Excellent | Strong capital efficiency |
| Return on Equity (ROE) | 19.8% | Good | Efficient use of shareholder equity |
| Gross Margin | 100.0% | Excellent | Strong pricing power |
| Operating Margin | 35.5% | Excellent | Efficient operations |
How Strong is Fox Corp's Cash Flow Quality?
Fox Corp generated $3.0B in free cash flow over the trailing twelve months, representing a 18.4% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1.5x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 18.4% | Good | Excellent cash conversion |
| Free Cash Flow (TTM) | $3.0B | Good | Positive cash generation |
| OCF/Net Income | 1.5x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is Fox Corp's Financial Health?
Fox Corp's debt-to-equity ratio of 0.6x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.6x | Good | Moderate leverage |
| Net Cash Position | $-1.3B | Warning | Net debt position |
Is Fox Corp Stock Overvalued or Undervalued?
Fox Corp trades at a P/E of 11.3x, representing a premium to the sector median of N/A.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 11.3x | Adequate | Reasonable valuation |
| EV/Sales | 0.2x | Excellent | Attractive revenue multiple |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 33.6% | Top 5% | 24.4x above |
| Free Cash Flow Margin | 18.4% | Top 25% | 2.7x above |
| Gross Margin | 100.0% | Top 10% | 1.5x above |
| Operating Margin | 35.5% | Top 5% | 12.0x above |
| Return on Equity (ROE) | 19.8% | Top 25% | - |
| P/E Ratio | 11.3x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 33.6% (Excellent - Top 5% of sector (median: 1.4%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 18.4% (Good - Top 25% of sector (median: 6.7%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 100.0% (Excellent - Top 10% of sector (median: 65.8%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 55.2% (Good)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 11.3x (Adequate)
Frequently Asked Questions
Q: What is Fox Corp's Return on Invested Capital (ROIC)?
Fox Corp (FOXA) has a trailing twelve-month Return on Invested Capital (ROIC) of 33.6%. This compares above the sector median of 1.4%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is Fox Corp's Free Cash Flow Margin?
Fox Corp (FOXA) has a free cash flow margin of 18.4%, generating $3.0 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is Fox Corp stock overvalued or undervalued?
Fox Corp (FOXA) trades at a P/E ratio of 11.3x, which is above the sector median of N/A. The EV/Sales multiple is 0.2x.
Q: How much debt does Fox Corp have?
Fox Corp (FOXA) has a debt-to-equity ratio of 0.6x with total debt of $6.6 billion. Net debt position is $1.3 billion.
Q: Is Fox Corp buying back stock?
Fox Corp (FOXA) repurchased $1.0 billion of stock over the trailing twelve months.
Q: How does Fox Corp compare to competitors in Communication Services?
Compared to other companies in Communication Services, Fox Corp (FOXA) shows: ROIC of 33.6% is above the sector median of 1.4% (Top 0%). FCF margin of 18.4% exceeds the sector median of 6.7% (Top 12% of sector). Gross margin at 100.0% is 34.2 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Communication Services companies with available SEC filings.
Q: What warning signs should I watch for with Fox Corp?
Fox Corp (FOXA) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-10-30. TTM metrics as of Q2 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.