FOXA — Fox Corporation

Sentiment flipped decisively positive after the 2026-08-06 fiscal Q4/FY26 report: Q4 EPS of $1.79 beat the $1.44 consensus, revenue of $4.21B beat the ~$3.64B expected and rose 28.1% YoY, and Tubi revenue grew 35% YoY. JPMorgan upgraded FOXA to Overweight with an $82 target and Wells Fargo raised its target to $80 in August 2026. The analyst pool (25 Buy / 23 Hold / 0 Sell) is constructive, with a $70.38 consensus target and a $60-$82 range. The tape confirms it: as of 2026-09-13 the stock was +4.58% over one month and +14.9% over six months, and RSI of 52.4 shows the move has not become frothy.

Revenue is in a solid multi-year uptrend but the quarterly pattern is highly lumpy and event-driven, not smooth compounding. Fiscal-year revenue went $13.98B (FY24) to $16.30B (FY25) to $17.13B (FY26), a FY26 growth rate of just +5.1% even though the June-2026 quarter alone grew 28.1% YoY — because Q3 FY26 (Mar 2026) revenue actually FELL 8.6% YoY to $3.99B while Q1 FY26 grew only 4.9%. Operating income is stable but not compounding: Q4 FY26 operating income was $985M (23.4% margin) vs $836M (25.4% margin) in Q4 FY25 — the World Cup lifted the top line but compressed the margin, since rights costs scale with the event. The genuinely uncomfortable line is earnings quality: GAAP net income fell in EVERY quarter of FY26 YoY (Q1 $599M vs $827M; Q2 $229M vs $373M; Q3 $166M vs $346M; Q4 $691M vs $717M), leaving FY26 net income 25.5% lower at $1.69B. TTM operating income of ~$3.35B against TTM net income of ~$1.69B means roughly half of operating profit is disappearing below the line (interest, tax, equity losses). Read: the revenue trend is real and improving, the margin trend is roughly flat-to-slightly-down, and the reported-earnings trend is a recent drag rather than a structural collapse — but it is not the 'exceptional growth' a 90-growth sub-score implies.

Fairly valued, with a mild forward-looking case for upside. As of 2026-09-13, FOXA's $65.94 price is 15.0x trailing EPS ($3.97) and 1.50x sales, versus a 5-year average P/E of 13.02 and P/S of 1.31 — optically rich on trailing numbers. But the trailing figure is depressed by the below-the-line drag noted above (9.8% net margin against a 24.5% FMP-reported operating margin), and on consensus FY27 EPS of $5.95 the stock trades at ~11.1x, roughly 15% BELOW its own five-year average multiple. PEG of -0.707 is meaningless here (it reflects a negative historical earnings-growth base, not a real signal). P/B of 2.13x is reasonable for a 14.5% ROE / 14.3% ROIC business with $4.2B cash against $6.6B long-term debt (net debt ~$2.4B, less than one year of FCF). Bottom line: expensive on trailing GAAP, cheap on forward, and the truth is 'fair' — the market is not paying for the FY27 EPS jump.

The market at $65.94 on 2026-09-13 is valuing FOXA on roughly $4 of earnings, not the $5.95 consensus puts on FY27 — that gap is the whole story. Either the market doubts the consensus jump (World Cup tail and midterm political advertising are cyclical and will fade in FY28), or it is a genuine mispricing waiting to be closed by the late-October 2026 Q1 FY27 print. The asymmetry favors patience: the $70.38 consensus target and $82 high imply 7-24% upside against a $60 low implying only ~9% downside, and the company has a real earnings lever (normalizing the below-the-line drag) that a single clean quarter could reveal. But do not underwrite the $5.95 as a run-rate — treat it as a peak-cycle number that needs political ads plus a World Cup tail to hit.

Range-bound-to-mildly-constructive, not a chase. As of 2026-09-13, RSI(14) stood at 52.42 — dead neutral, no overbought or oversold signal. The stock was 2.36% BELOW its 20-day SMA but still 6.74% above its 50-day and 3.95% above its 200-day, i.e. a normal pullback inside an intact uptrend. The tell is the three-month return of +0.14%: a strong earnings beat in early August produced essentially no three-month price progress, which suggests the good news is already substantially in the price and the stock is consolidating roughly $62-$70 within its $48.34-$76.39 52-week range. Timing implication: accumulate on weakness toward the 50-day SMA rather than buying the top of the range, and let the October 2026 print be the catalyst that resolves the range.

• Secular cord-cutting: pay-TV subscriber erosion keeps pressure on affiliate/retransmission fee growth, but Fox is better insulated than most peers because live news and live sports (NFL, college football, FIFA) cannot be time-shifted and retain carriage leverage.
• Advertising cycle timing: the 2026 US midterm election is a large, dated, one-off political-ad windfall across Fox News and the local station group, but it reverses sharply in FY28 — a tailwind this year and a headwind next.
• CTV/FAST structural shift: the migration of ad dollars to connected TV benefits Tubi (revenue +35% YoY) and partially offsets linear ad softness, but it also fragments audiences and pressures linear CPMs.
• Sports rights cost inflation: NFL, college football and FIFA rights renewals escalate faster than the top line, which is why Q4 FY26 revenue rose 28.1% while operating margin slipped from 25.4% to 23.4%.
• Rate/discount-rate environment: with a 0.56 beta and 0.84% dividend yield, FOXA is a defensive, rate-sensitive media asset; a lower-rate backdrop supports multiple expansion, and cheap financing would make the rumored streaming/platform M&A chatter more actionable.

• Q1 fiscal 2027 earnings, expected ~October 28-29, 2026 — the first hard read on early-cycle political ad spend, the residual World Cup tail, and whether the below-the-line earnings drag normalizes.
• Special meeting of stockholders on October 14, 2026, which may address structural/strategic corporate matters; any announced digital M&A or asset move would be a re-rating event.
• The 2026 midterm election advertising cycle ramping through November 2026 across Fox News and the local stations — the single largest identifiable revenue swing factor in FY27.
• Continued Tubi scaling (+35% YoY) and any disclosure of improving streaming profitability or a path to it, which would support a higher multiple than a pure linear broadcaster.
• Potential platform/streaming consolidation (management is reported to be evaluating targets such as Roku) — positive if priced sensibly, negative if it signals a high-priced defensive land grab.

• One-off revenue concentration: the FIFA World Cup is quadrennial and midterm political advertising is biennial, so FY27/FY28 comparables get materially harder — a 90-growth score backward-looking on FY26 overstates the durable growth rate.
• Earnings-quality gap: TTM operating income of ~$3.35B versus TTM net income of ~$1.69B means roughly half of operating profit is being absorbed below the line, and GAAP net income declined YoY in all four quarters of FY26 despite revenue growth.
• Pay-TV affiliate fee erosion: cord-cutting is a slow but relentless drag on the highest-margin revenue line, partially masked by live-sports carriage leverage that cannot offset subscriber declines forever.
• Sports rights inflation: escalating NFL/college/FIFA rights costs compress margins precisely in the high-revenue event quarters, as Q4 FY26 demonstrated (28.1% revenue growth, 200bp margin decline).
• Governance and control: Murdoch family voting control, succession uncertainty, and the low 0.84% dividend yield mean minority holders have limited influence and modest income support if the thesis stalls.

Fox is a genuinely good business — 24.5% operating margin, 14.3% ROIC, net debt of only ~$2.4B against $4.2B cash, and a defensible moat in un-recordable live news and sports that most media peers simply do not have — trading at ~11x forward EPS versus its own 13x five-year average. That is enough to own it. What stops this from being a high-conviction buy is that the trailing numbers are flattered by quadrennial events, GAAP earnings actually fell 25% YoY in FY26 on below-the-line items, and the stock has made zero net progress over three months despite a blowout quarter. My read is a steady accumulate-on-dips holding, not a chase at $66.

Applied a 12.5x forward P/E to the consensus next-fiscal-year EPS of $5.95, giving $74.38. The 12.5x is a deliberate small discount to Fox's own 5-year average trailing P/E of 13.02x, justified by secular cord-cutting and by the fact that FY27 consensus EPS is flattered by the quadrennial FIFA World Cup tail plus a one-off midterm political-ad cycle. I cross-checked it with a normalized free-cash-flow yield: ~$2.5B of sustainable annual FCF (versus a lumpy $3.40B reported TTM) over ~438M shares is $5.71/share, which at a 7.5-8.0% required yield brackets $71-$76 and confirms the ~$74 estimate.