Rupert Murdoch's News Corp (ASX: NWS) reported its interim results last Friday which in turn led to a 2.6% rally in the share price.
What happened?
The results showed flat adjusted revenue of US$4.3 billion for the six months to 31 December 2014 compared with the previous corresponding period (pcp). Meanwhile adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) showed a solid increase with a 9% jump to US$543 million.
Amongst the highlights were a 6% rise in adjusted EBITDA for the Book Publishing division, a 10% rise in EBITDA for the Cable Network Programming division and a continued strong performance by the Digital Real Estate Services division which includes the group's ownership share of REA Group Limited (ASX: REA).
Should you buy?
On an adjusted earnings per share basis, shareholders saw a rise from US 34 cents per share (cps) in the pcp to US 35 cps in the recent half. Converting those current earnings to Australian dollars at today's exchange rate, equates to 44.9 cps; this implies the stock is trading on an annualised price-to-earnings ratio of 22x.
This is a relatively hefty price to pay for a stock unless a high rate of growth in earnings can be expected from the company. In the case of News Corp, the group certainly owns some appealing media assets, however, as Australia's richest woman Gina Rinehart has come to discover through her disappointing investment in Fairfax Media Limited (ASX: FXJ), old world media assets still face plenty of headwinds. Arguably at News Corp's current share price there are better opportunities available for savvy investors.
