Shares of Fox Corp. (FOX) have been trending sideways and a rectangle pattern has formed in the chart.
FOX is an entertainment company that provides news and content under the FOX News Media, FOX Sports, FOX Entertainment and FOX Television Stations brands. The company has benefited from a strong adoption of Fox News and Fox Business Network and is expected to benefit from an increasing demand for live programming.
The firm generates a large portion of ad revenues from live programming, which helps protect its business from video-on-demand streaming. Revenue is also being aided by an increase in affiliate fees.
FOX has a solid balance sheet with $4.7 in cash on its balance sheet as of the last reported quarter. That was an increase of 43.6% year over year. The company has a current ratio of 3.9, meaning it has plenty of cash on hand to pay short-term debt. It also has a very low 0.8 debt to equity ratio.
The company’s growth has not been strong. Sales were up 6.8% over the past year, but earnings fell 32.4%. Sales are expected to be flat next year. From a valuation standpoint, the company has a low P/E of 16.5 and a Price to Book of 1.6, indicating that it is trading at a low multiple.
Momentum has not been on its side, as the stock is down over the short, mid and long term. This has led to poor grades in our POWR Ratings system.
Take a look at the 1-year chart of FOX below with added notations:
Chart of FOX provided by TradingView
Over the past couple of months, FOX has moved into a sideways trading range. While in the range, the stock has formed a resistance level at $30 (red), and a level of support at $26 (green). At some point, the stock will have to either break the $30 resistance or the $26 support.
The possible trades in this stock are a buy on a breakout above $30 or a short on a breakdown below $26.
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FOX shares were trading at $27.46 per share on Thursday morning, up $0.71 (+2.65%). Year-to-date, FOX has declined N/A%, versus a 8.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock.
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