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Comcast: Proven Resilience In 2020; Low-Teens Annualized Return Ahead

Apr. 02, 2021 8:00 AM ETComcast Corporation (CMCSA) StockATUS, CHTR, DIS, T, VZ6 Comments
Librarian Capital profile picture
Librarian Capital


  • Comcast has continued its journey as a multi-year compounder, and we believe Free Cash Flow/Share CAGR will be 10%+ in the future.
  • Cable EBITDA growth was 8.6% in 2020, thanks to record internet subscriber growth during COVID, and will likely be 6% thereafter.
  • In NBC Universal, Theme Parks were inevitably impacted by COVID but are now breaking even, and other businesses have been resilient.
  • Sky was hit by COVID’s impact on “pubs and clubs” subscriptions and ad revenues, but expects to double its EBITDA over the next few years.
  • With shares at $54.98, we expect an exit price of $78 and a total return of 52% (12.2% annualized, including an 1.8% Dividend Yield). Buy.
A View Of The Comcast Center
Photo by Cindy Ord/Getty Images Entertainment via Getty Images


We review our Comcast (NASDAQ:CMCSA) investment case five months since our last update, with the share price having risen 31%. Since we initiated our coverage with a Buy rating in January 2020, Comcast shares have gained 25.6% (including

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Analyst’s Disclosure: I am/we are long CMCSA, CHTR. 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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Comments (6)

Interested to find out how this compares to Charter and Discovery (after the major correction) Perhaps a future article? :)
Librarian Capital profile picture
@Karan1 Thanks, I have written about Charter extensively (link to latest article below). Which one you prefer depends on what you think about Comcast's media businesses and valuation.

Comcast has media businesses whereas Charter is a Cable pureplay. Both Cable operations grew at similar rates. As mentioned above, Theme Parks seem great but Media and Studios face competition from Disney, Netflix, etc. - so you have to decide whether having NBCU (and Sky) makes Comcast better or worse (I will probably say a bit worse).

Charter is more levered, targeting a 4.0-4.5x Net Debt / EBITDA, whereas Comcast is trying to get back below 2.5x. So, even for the same EBITDA growth, Charter will grow its per-share earnings probably 5 ppt faster.

On valuation terms, both Charter and Comcast are trading at 4.7% FCF Yield. However, Charter is not paying cash taxes now - these will start in 2022, probably reducing its FCF by 20-25%. On the other hand, Charter probably deserves a higher valuation because it's a Cable pureplay and grows faster - so I have assumed exit FCF Yields of 4.0% for Charter and 6.0% for Comcast.

Overall, I marginally prefer Charter, which is one of my highest-conviction stocks, but (as disclosed above) I hold both and more in Charter by a small margin (Charter is a top-5 holding; Comcast is a top-10 one).

I hope this helps. I haven't looked at media-only stocks for a few years, and probably won't be researching Discovery any time soon.

@Librarian Capital wow thank you for the extremely detailed reply. This helps immensely! :) I will read the article on Charter as well. Media is something outside my circle of competence but I find the space Fascinating for the reasons you mentioned i.e. ongoing disruption in the business model currently under way and trying to understand how these companies adapt (and why it continues to draw new, more niche entrants like CURI etc.) You have my thanks as always
Librarian Capital profile picture
@Karan1 Thank you - it was a good question, and I enjoyed answering it.
Sounds abt right! I have been an investor since cmcsa was 26. I’m long and will continue to watch it’s rise.great management prevails.
Librarian Capital profile picture
@deadhead213 thank you for sharing, and congratulations on your gains.

(I also have an entry price around $26 on Comcast; I actually bought the Special Class A shares, ticker CMCSK, back then.)
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