Comparing Valuation And Performance: Twenty-First Century Fox, Inc. (FOXA), The Coca-Cola Company (KO)

The shares of Twenty-First Century Fox, Inc. have increased by more than 40.78% this year alone. The shares recently went up by 0.54% or $0.26 and now trades at $48.61. The shares of The Coca-Cola Company (NYSE:KO), has slumped by -5.73% year to date as of 06/22/2018. The shares currently trade at $43.25 and have been able to report a change of -1.97% over the past one week.

The stock of Twenty-First Century Fox, Inc. and The Coca-Cola Company were two of the most active stocks on Friday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: 10.55% versus 7.43%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that FOXA will grow it’s earning at a 10.55% annual rate in the next 5 years. This is in contrast to KO which will have a positive growth at a 7.43% annual rate. This means that the higher growth rate of FOXA implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. FOXA has an EBITDA margin of 20.41%, this implies that the underlying business of KO is more profitable. The ROI of FOXA is 9.20% while that of KO is 12.50%. These figures suggest that KO ventures generate a higher ROI than that of FOXA.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, FOXA’s free cash flow per share is a positive 5.33, while that of KO is positive 0.96.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for FOXA is 2.10 and that of KO is 1.20. This implies that it is easier for FOXA to cover its immediate obligations over the next 12 months than KO. The debt ratio of FOXA is 1.05 compared to 2.50 for KO. KO can be able to settle its long-term debts and thus is a lower financial risk than FOXA.


FOXA currently trades at a forward P/E of 21.73, a P/B of 4.75, and a P/S of 3.03 while KO trades at a forward P/E of 19.14, a P/B of 9.40, and a P/S of 5.43. This means that looking at the earnings, book values and sales basis, FOXA is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of FOXA is currently at a 13.31% to its one-year price target of 42.90. Looking at its rival pricing, KO is at a -12.87% relative to its price target of 49.64.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), FOXA is given a 2.50 while 2.30 placed for KO. This means that analysts are more bullish on the outlook for FOXA stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for FOXA is 2.40 while that of KO is just 3.12. This means that analysts are more bullish on the forecast for FOXA stock.


The stock of The Coca-Cola Company defeats that of Twenty-First Century Fox, Inc. when the two are compared, with KO taking 6 out of the total factors that were been considered. KO happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, KO is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for KO is better on when it is viewed on short interest.

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