Since January 2021, the S&P 500 has delivered a total return of 84.9%. But one standout stock has nearly doubled the market - over the past five years, FOX has surged 154% to $73.16 per share. Its momentum hasn’t stopped as it’s also gained 32.7% in the last six months thanks to its solid quarterly results, beating the S&P by 22.8%.
Is there a buying opportunity in FOX, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.
Why Do We Think FOX Will Underperform?
We’re glad investors have benefited from the price increase, but we don't have much confidence in FOX. Here are three reasons you should be careful with FOXA and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, FOX grew its sales at a weak 5.9% compounded annual growth rate. This was below our standard for the consumer discretionary sector.
2. Cash Flow Margin Set to Decline
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Over the next year, analysts predict FOX’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 16.2% for the last 12 months will decrease to 7.2%.
3. New Investments Aren’t Moving the Needle
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, FOX’s ROIC has stayed the same over the last few years. If the company wants to become an investable business, it must improve its returns by generating more profitable growth.
Final Judgment
We see the value of companies helping consumers, but in the case of FOX, we’re out. With its shares outperforming the market lately, the stock trades at 16× forward P/E (or $73.16 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are superior stocks to buy right now. We’d suggest looking at one of our top software and edge computing picks.
Stocks We Would Buy Instead of FOX
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.