News Corporation (ASX: NWS) shares have been in a bit of a slump over the past three months, but with management upbeat about the future, it's worth asking whether they represent good buying at the moment.
The Jarden team have run the ruler over News Corp's books, and they don't mind what they see.
Image source: Getty Images
Trading well
News was announced last week that News Corp's first-quarter revenue had come in at US$2.1 billion, a 2% increase over the same period last year, and EBITDA had come in at US$340 million, up 5%.
Chief Executive Officer Robert Thomson was particularly effusive about the result.
As he said in a statement to the ASX:
Following a sterling performance in fiscal 2025 – one that market a record year for profitability on a continuing operations basis – News Corp continued to increase both revenue and profitability in the first quarter of fiscal 2026, led by strength at Dow Jones and Digital Real Estate Services, and bolstered by digital and AI-related revenues.
Mr Thomson said the positive results came despite an "uncharacteristically weak" performance from the company's book publishing division, although that segment had shown signs of recent improvement.
Mr Thomson said the company was also leaning into its share buyback.
Clearly our cash position is robust, and we expect to generate strong free cash flow this fiscal year, and have thus materially increased the rate of our share buybacks. We believe our shares are undervalued, given the sum of our valuable parts and our profit trajectory, and we will continue to focus on ways and means to maximise shareholder value.
Share valuation looking slightly cheap
So the boss likes the shares, but what about the team at Jarden?
For a start, they agreed it was a "solid result", with good momentum from Dow Jones and the news media division, and earnings from realestate.com.au owner REA Group Ltd (ASX: REA) – which News Corp owns a majority stake in – in line with expectations.
Jarden decreased its price target on News Corp stock following last week's report from $53 to $51.70; however, this still remains higher than the current price of $46.46.
Factoring in the modest dividend News Corp pays, the Jarden team believes shareholders would be looking at a combined total return of 12% over a year.
While they believe that REA Group – which accounts for a large part of News Corp's value – is overvalued, they "believe the market is undervaluing the remainder of News''.
Jarden has an underweight rating on REA Group and a price target of $207, compared with $208.91 as of Tuesday morning.
