Comcast: Buy the Dip or Steer Clear?
Comcast (CMCSA) shares are trading significantly below their 52-week high, despite reporting better-than-expected earnings and revenues. So, will it be wise to buy the dip in CMCSA or steer clear?...
Comcast (CMCSA) shares are trading significantly below their 52-week high, despite reporting better-than-expected earnings and revenues. So, will it be wise to buy the dip in CMCSA or steer clear? Read on to learn our view.
Comcast Corporation (CMCSA) is a media and technology company. Its Cable Communications segment consists of the operations of Comcast Cable, which provides broadband, video, voice, and other services under the XFINITY brand. Its Media segment consists of television and streaming platforms. Its Studios segment consists of film and television studio production and distribution operations. The company has three primary businesses: Comcast Cable, NBCUniversal, and Sky.
CMCSA reported impressive fiscal first-quarter results, beating Wall Street estimates for sales and adjusted EPS by 1.9% and 6.8%, respectively.
However, the stock has declined 22.6% in price over the past six months and 29.5% over the past year to close the last trading session at $39.76. The stock is down 35.6% from its 52-week high of $61.80, which it hit on September 3, 2021.
Here’s what could influence CMCSA’s performance in the upcoming months:
CMCSA’s revenue for the fiscal first quarter ended March 31, 2022, increased 13.9% year-over-year to $31.01 billion. The company’s adjusted net income increased 10.5% year-over-year to $3.90 billion. Also, its adjusted EBITDA increased 8.7% year-over-year to $9.15 billion. In addition, its adjusted EPS came in at $0.86, representing an increase of 13.1% year-over-year.
Favorable Analyst Estimates
CMCSA’s EPS for fiscal 2023 is expected to increase 11.8% year-over-year to $3.99. Its revenue for fiscal 2022 is expected to increase 5.3% year-over-year to $122.50 billion. It surpassed Street EPS estimates in each of the trailing four quarters. Its EPS is expected to increase 13.4% per annum over the next five years.
In terms of forward EV/EBITDA, CMCSA’s 7.26x is 15.6% lower than the 8.61x industry average. Its forward non-GAAP P/E of 11.08x is 36.1% lower than the 17.35x industry average. Also, the stock’s 0.79x forward non-GAAP PEG is significantly lower than the 1.32x industry average.
In terms of trailing-12-month EBIT margin, CMCSA’s 17.76% is significantly higher than the 9.57% industry average. Likewise, its 29.40% trailing-12-month EBITDA margin is 47.5% higher than the industry average of 19.92%. Furthermore, the stock’s trailing-12-month ROCE, ROC, and ROA came in at 15.36%, 6.68%, and 5.25%, compared to the industry averages of 7.05%, 3.89%, and 3%, respectively.
POWR Ratings Show Promise
CMCSA has an overall rating of B, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. CMCSA has a B grade for Quality. This is justified given its 66.64% trailing-12-month gross profit margin compared to the 50.93% industry average.
CMCSA also has a B grade for Stability, consistent with its 0.93 beta.
CMCSA possesses robust financials, higher-than-industry profitability, and decent revenue and earnings growth prospects. So, we think it could be wise to buy the dip in the stock.
How Does Comcast Corporation (CMCSA) Stack Up Against its Peers?
CMCSA has an overall POWR Rating of B, equating to a Buy rating. This rating is superior to its peers within the Entertainment – TV & Internet Providers industry, such as Charter Communications, Inc. (CHTR), Altice USA, Inc. (ATUS), and Cable One, Inc. (CABO), which are all rated C (neutral).
CMCSA shares rose $0.14 (+0.35%) in premarket trading Monday. Year-to-date, CMCSA has declined -20.16%, versus a -13.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
Entrepreneur Editors' Picks
These Co-Founders Are Using 'Quiet Confidence' to Flip the Script on Cutthroat Startup Culture and Make Their Mark on a $46 Billion Industry
My 7-Year-Old Daughter Started Selling Eggs. Here's What She Taught Me About Running a Startup.
Why You Need to Become an Inclusive Leader (and How to Do It)
Career Transitions You Can Make in Your 40s and 50s
Billionaire Naveen Jain Is an Expert at Disrupting Fields He Has No Experience In. His Secret Sauce for Building Multi-Million Dollar Companies? 'You Have to Come as Naive.'
4 Principles to Develop Next-Level Leadership at Your Company
This Filipino American Founder Is Disrupting the Beverage Aisle by Introducing New Flavors to the Crowded Bubbly Water Market