Goldman Sachs’ Stocks With Highest Consensus Returns: 42 Stocks With The Highest Consensus ROE

29. News Corporation (NASDAQ:NWS)

Consensus ROE: 10%

Number of Hedge Fund Investors in Q2 2024: 25

News Corporation (NASDAQ:NWS) is an American media and publication company owned by the billionaire Rupert Murdoch. It distributes some of the most well known financial publications in the world such as The Wall Street Journal, Barron’s, Dow Jones Newswires, and Factiva. Additionally, News Corporation (NASDAQ:NWS) also has a sizeable presence in Australia through an equally well known set of media businesses. Its brand image and scale, as evidenced through cash and equivalents of $1.9 billion and trailing twelve month revenue of $10 billion means that News Corporation (NASDAQ:NWS) is better positioned to manage the shifting trends in the media industry which are driving users towards alternative news sites and forcing publishers to drive growth through subscribers. Additionally, as publisher revenue is driven through advertising, News Corporation (NASDAQ:NWS) tends to do well when business spending isn’t constrained. Consequently, its revenue fell by 5% between fiscal year 2022 and 2023 as global spending slowed due to high rates.

During its fiscal Q4 2024 earnings call, News Corporation (NASDAQ:NWS)’s management shared how a diversified business helps it hedge against falling advertising revenues:

“The progress at Dow Jones continues to apace with revenue growth in the quarter of 4% despite a mixed advertising market. At the heart of that growth is the continued strength of B2B, where revenues climbed 14% of Dow Jones Energy and 12% at Risk & Compliance. In fact, fiscal ’24 was a pivotal moment in the history of the company. As it was the first year in which more than 50% of Dow Jones profitability was driven by the surging B2B segment. Indeed, it is difficult to overstate the impact of B2B growth on Dow Jones and News Corp over the past four years as B2B revenue has expanded at a compound annual rate of 17% and the margin at Dow Jones has broadened from 15% to 24% while segment EBITDA has more than doubled. Crucially, Digital accounted for 80% of fiscal 2024 segment revenue, up from 67% in 2020.

And the core B2B products have renewal rates north of 90%. In that same 4-year span, total subscriptions in the consumer business have burgeoned nearly 55% with digital subs almost doubling. For the fourth quarter, Dow Jones gained 158,000 digital subscribers sequentially and digital advertising expanded 14% year-over-year, more than offsetting the expected declines in print advertising. The quality of Wall Street Journal content continues to be a differentiator as our company signed a valuable multiyear content licensing agreement with the London Stock Exchange Group to provide WSJ news and analysis to its corporate clients, thus building our brand in the European marketplace.”