News Corp stock came into this earnings print priced for perfection, trading on a P/E of 26.9x that already sat above the US media industry and peer averages. The immediate reaction has been a pullback of about 4%, which signals investors are reassessing how much they want to pay for this story after what has been described as a strong fundamental year.

The key takeaway from these results is margin performance. Net profit margin over the last 12 months sat at 6.3%, ahead of the prior year, and full year free cash flow reached US$811 million. Those numbers help frame a richer valuation that now faces a more sceptical market after the latest report.

Is News now a classic case of earnings strength meeting an overextended P/E, or is the market underestimating what those 6.3% margins and US$811 million in free cash flow justify? Compare today’s US$28.52 share price with detailed cash flow and peer multiple work on the valuation analysis for News.

FY 2026 Earnings Summary

• Revenue (Q4 FY 2026 vs Q4 FY 2025): US$2,337 million vs. US$2,109 million (up 10.8%)
• Net Income from Continuing Operations (Q4 FY 2026 vs Q4 FY 2025): US$230 million vs. US$53 million (very large increase)
• Basic EPS (Q4 FY 2026 vs Q4 FY 2025): US$0.33 vs. US$0.09 (up 252.7%)
• Net Profit Margin (Trailing 12 Months vs Prior Year): 6.3% vs. 5.7% (up 0.6 percentage points)

Prefer clean charts instead of another wall of earnings tables and ratios for News? Get a full visual breakdown of the stock with an emphasis on its valuation in the company report for News.

News Corp’s Bull Case Hinges On Proving “Digital, Recurring, Higher Margin”

Bulls argue News Corp is becoming a majority digital, recurring revenue and higher margin business. The latest numbers go a long way toward proving that. Digital revenue reached 61% of group sales in FY26 and Dow Jones B2B, defined as business to business, now contributes more than half of that segment’s EBITDA, which is the milestone many bulls were watching for proof of a genuine mix shift.

EBITDA growth of 31% in Q4 against 11% revenue growth shows the promised operating leverage is starting to show up in the income statement. Free cash flow of US$811 million with roughly 50% conversion from EBITDA, together with US$643 million of buybacks in FY26, backs up the claim that this is now a cash return story, not just a turnaround narrative.

Compare that internal cash generation story with external expectations and see whether Wall Street thinks News has actually earned this richer multiple. See the consensus price target analysis for News

News Corp Bears See Execution Risks, Not Collapse

The bearish view is that News Corp faces structural print decline, audience fragmentation and rising digital costs that will eventually cap margins and put recurring revenue at risk. This quarter does not give that thesis a clear win. Group EBITDA grew faster than revenue and the Q4 margin reached 18.1%, which runs counter to fears of cost driven margin compression. Digital Real Estate and Dow Jones both posted double digit EBITDA growth, which challenges the idea that dominant ad platforms are permanently capping digital economics.

The cautious view still has traction in the more traditional News Media segment, where EBITDA slipped by US$4 million as management reinvested in launches like California Post. That is an example of the reinvestment burden bears focus on. The share price reaction, down about 4% on the day, also shows how sensitive the stock remains to any hint that this improved mix and margin profile might not be secure.

Despite the healthy free cash flow and buybacks, News is still priced at a premium P/E and above a trailing DCF estimate, which raises a hard question about balance sheet resilience. Check the real debt, liquidity and cash runway story in the financial health analysis of News stock.

Take Control Of Your Next Move

If the mix of premium P/E, 6.3% net profit margin and US$811 million in free cash flow has put News on your radar, register for free with Simply Wall St and add it to a Watchlist to track the share price against fair value and watch for a more attractive entry point. Once you own it or any other stock, use the Portfolio Command Center to cut through market noise and focus on the most important changes to your holdings. For longer term conviction, tap into crowd insights and different angles on News through the Community. This combination helps you spot potential catalysts and risks early so you can stay a step ahead of the market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.