The global entertainment and media industry is expected to record steady growth rates as more people are spending their time, attention, and money on immersive entertainment experiences. According to PwC, the industry’s revenues surged by 10.4% in 2021. Moreover, the industry is expected to approach $3 trillion in revenues by 2026.
The shares of the entertainment giant Netflix, Inc. (NFLX) jumped after the company reported lower than anticipated subscriber losses during the second quarter. NFLX only lost around 970,000 subscribers, compared to the 2 million it had projected earlier. The stock has gained 13.2% over the past month. However, the company is struggling to maintain its impressive pandemic-era growth.
We think investors who missed out on NFLX could add fundamentally sound entertainment stocks Townsquare Media, Inc. (TSQ) and News Corporation (NWSA) to their portfolio.
Townsquare Media, Inc. (TSQ)
TSQ operates as a digital media and marketing solutions company in small and medium-sized businesses. It operates through three segments: Subscription Digital Marketing Solutions; Digital Advertising; and Broadcast Advertising.
On May 10, 2022, Bill Wilson, TSQ’s CEO, said, “As we move forward, we expect double-digit digital net revenue growth to continue at strong margins, fueling our overall growth and subsequent debt reduction, from 4.66x net leverage today to 4.0x by year end. We are also pleased to re-affirm our 2022 guidance and our 2024 digital revenue target of at least $275 million.”
For the first quarter ended March 31, 2022, TSQ’s net revenue increased 12.9% year-over-year to $100.24 million. Its adjusted net income came in at $3.79 million, up 13.5% year-over-year, while its adjusted EPS came in at $0.19, up 46.2% year-over-year.
Analysts expect TSQ’s revenue to be $471.18 million in 2022, representing a 12.7% year-over-year increase. The company’s EPS is expected to rise 66.7% year-over-year to $2.05 in 2022. The stock has lost marginally over the past month to close the last trading session at $8.10.
TSQ’s POWR Ratings reflect its solid prospects. The company has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
In addition, it has an A grade for Sentiment and a B grade for Value. TSQ is ranked first among five stocks in the A-rated Entertainment – Radio industry. Click here to see the additional POWR Ratings for TSQ (Growth, Momentum, Stability, and Quality).
News Corporation (NWSA)
NWSA, a media and information services company, focuses on creating and distributing content for consumers and businesses worldwide. It operates in six segments: Digital Real Estate Services; Subscription Video Services; Dow Jones; Book Publishing; News Media; and Other.
On June 1, 2022, NWSA completed the acquisition of the Base Chemicals business from S&P Global Market Intelligence. Moreover, in February, NWSA acquired OPIS (the Oil Price Information Service) and related assets from S&P Global and IHS Markit. Both these acquisitions should expand NWSA’s news and information capabilities.
NWSA’s total revenues increased 6.7% year-over-year to $2.49 billion for the third quarter ended March 31, 2022. Its adjusted net income came in at $96 million, up 74.5% year-over-year. Also, its adjusted EPS came in at $0.16, up 77.8% year-over-year.
For 2022, analysts expect NWSA’s revenue to increase 10.2% year-over-year to $10.31 billion. Its EPS is expected to grow 19.1% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 5.2% to close the last trading session at $16.31.
NWSA has an overall B rating, which indicates a Buy in our proprietary rating system. Additionally, it has a B grade for Growth and Sentiment.
Within the Entertainment - Media Producers industry, it is ranked first among 18 stocks. Click here to see the additional NWSA ratings for Value, Momentum, Stability, and Quality.
TSQ shares were trading at $8.10 per share on Wednesday afternoon, down $0.00 (0.00%). Year-to-date, TSQ has declined -39.23%, versus a -15.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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