News CorporationNWSANASDAQ
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DCF Valuation
DCF Valuation Summary
Buy
Base Case: $27.06 per share
+19.1%
Upside to Target
Bear Case
$23.33
Base Case
$27.06
Current
$22.72
Bull Case
$31.55
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)0.97
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)8.86%
Cost of Debt
Pre-tax Cost of Debt1.91%
Tax Rate29.79%
After-tax Cost of Debt1.34%
Equity Weight (E/V)81.44%
Debt Weight (D/V)18.56%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (81.44% × 8.86%) + (18.56% × 1.34%)
= 7.46%
10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)
| Year | Year 1 | Year 3 | Year 5 | Year 7 | Year 10 |
|---|---|---|---|---|---|
| Revenue | $8.8B | $9.5B | $9.9B | $10.3B | $11.1B |
| EBIT | $766M | $826M | $863M | $896M | $969M |
| Tax | $228M | $246M | $257M | $267M | $289M |
| NOPAT | $538M | $580M | $606M | $629M | $681M |
| + Depreciation | $681M | $734M | $767M | $796M | $862M |
| - Capex | $476M | $514M | $537M | $557M | $603M |
| - Δ NWC | $34M | $37M | $13M | $20M | $32M |
| Free Cash Flow | $709M | $763M | $823M | $848M | $907M |
| Discount Factor | 0.931 | 0.806 | 0.698 | 0.604 | 0.487 |
| Present Value | $660M | $615M | $574M | $512M | $442M |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$907M
Terminal Growth Rate1.73%
WACC7.46%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$16.1B
PV of Terminal Value$7.8B
Exit Multiple Method
Year 10 EBITDA$1.8B
Exit Multiple (EV/EBITDA)14.5x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$26.5B
PV of Terminal Value$12.9B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$5.5B
PV of Terminal Value$7.8B
Enterprise Value$13.4B
(-) Net Debt$537M
Equity Value$12.8B
Shares Outstanding$568M
Price per Share$22.60
Exit Multiple Method
PV of Projected FCFs$5.5B
PV of Terminal Value$12.9B
Enterprise Value$18.4B
(-) Net Debt$537M
Equity Value$17.9B
Shares Outstanding$568M
Price per Share$31.52
Base Case Fair Value
$27.06
Average of perpetuity growth and exit multiple methods
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 1.00% | 1.50% | 1.73% | 2.23% | 2.73% |
|---|---|---|---|---|---|
| 5.46% | $30.05 | $32.85 | $34.38 | $38.48 | $44.09 |
| 6.46% | $24.59 | $26.27 | $27.16 | $29.43 | $32.30 |
| 7.46% | $20.96 | $22.04 | $22.60 | $23.99 | $25.68 |
| 8.46% | $18.39 | $19.13 | $19.51 | $20.43 | $21.50 |
| 9.46% | $16.52 | $17.04 | $17.30 | $17.94 | $18.67 |
How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.
Scenario Analysis
Bear Case
$23.33
2.7% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.0%
- • Beta: 1.21
Base Case
$27.06
19.1% vs current
- • Analyst consensus
- • Terminal growth: 1.7%
- • Beta: 0.97
Bull Case
$31.55
38.9% vs current
- • +25% vs analyst consensus
- • Terminal growth: 2.2%
- • Beta: 0.82
Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Communication Services Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth3.97%
Year 3 Revenue Growth4.07%
Year 5 Revenue Growth1.38%
Year 7 Revenue Growth2.03%
Year 10 Revenue Growth3.00%
Terminal Growth Rate1.73%
Margin & Efficiency
EBIT Margin8.72%
Tax Rate29.79%
Capex / Revenue5.42%
NWC / Revenue10.00%
Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.
Institutional-Grade Methodology
Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta
Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (S&P 500: 22x P/E)
This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.