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Comcast Ready To Get Out Of Its Slump

May 05, 2018 4:51 PM ETComcast Corporation (CMCSA)35 Comments
Alberto Wallis profile picture
Alberto Wallis


  • EPS in Q1 2018 grew by 17% compared to Q1 2017.
  • Dividends expected to grow by 21% in 2018.
  • NBC is partnering with Google on a Virtual Reality project.
  • Fair value estimates and price targets indicate between 20%-50% upside.

Comcast (NASDAQ:CMCSA), the largest media conglomerate in terms of revenue, has significantly under performed the market in the last year. Investors seem to be favoring up and coming companies such as Netflix (NFLX), which has resulted in a decrease in price for Comcast. This has created a great opportunity to invest in a well-established company at a discount.

ChartCMCSA data by YCharts

In the last 12 months, Comcast’s stock has lost around 22% of its value, while the S&P 500 is up about 10.18% in that same span. The severe drop in price, coupled with a sharp increase in EPS, resulted in Comcast's P/E ratio dropping significantly to 6.39, the lowest it has been in decades. However, that P/E is skewed because of a one-time $12.7 billion benefit due to changes in their deferred income tax liabilities that drastically increased their EPS in Q4 2017. Without it, Comcast’s P/E (ttm) would likely be around 14. Nonetheless, a PE of 14 it is still relatively low, considering that Comcast had a P/E of between 17 and 23 from 2013 to 2017, and the average PE of the S&P 500 is about 24. With no signs of slowing down their growth, I believe Comcast is undervalued at the moment.

Q1 Results

(Chart from Comcast Investor Presentation)

In Q1 2018, Comcast’s revenue grew by over 10% compared to last year’s Q1. The company saw strong growth in the High Speed Internet service (8.2%), while only moderate growth in their cable revenue (3.6%). NBC saw strong growth in theme parks (14.5%), while Cable Networks (6.6%) and Broadcast TV (4.3%) saw moderate growth. This last two figures are excluding the Super Bowl and Olympics, both of which made a significant impact in actual revenue.

EBITDA grew by only 3.3%, while EPS increased by an outstanding 17%. This

This article was written by

Alberto Wallis profile picture
Financial Analyst at Fincredible. I'm focused on finding quality growth stocks with significant potential for outperformance. I look for companies with sound business models and economic advantages that can deliver strong results over the long term. I studied Economics at the Universidad Metropolitana in Venezuela, and I'm currently pursuing a Master's Degree in Finance com IESA Business School.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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