Comcast: Value Trap Or Deep Value?

Oct. 05, 2022 6:40 PM ETComcast Corporation (CMCSA)DIS, NFLX, PARA, WBD13 Comments
Cavenagh Research profile picture
Cavenagh Research
3.72K Followers

Summary

  • Looking at the share price bloodbath in the media space, I am confident in speculating that investors have overreacted.
  • After a sharp sell-off, down about 39% YTD, Comcast now trades at a one-year forward EV/EBIT of x9.7.
  • A valuation characteristic for a value trap is not justified, as Comcast is still growing its topline and the company's profitability remains strong.
  • In Q2 2022, Comcast returned a combined $4.2 billion to equity investors, $3.08 billion share repurchases and $1.2 billion of dividends.
  • In my opinion, Comcast stock is a strong buying opportunity.

A View Of The Comcast Center

Cindy Ord

Thesis

When a company is trading at x10 EV/EBIT, I like to define it as a deep value opportunity. Because on an unlevered basis, the business would return a yield of 10% (inverse the EV/EBIT multiple).

After a

CMCSA vs SPX YTD

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Comcast Q2 Results Presentation

Comcast Q2 Results Presentation

CMCSA Shareholder Distribution

CMCSA Q2 Investor presentation

CMCSA valuation

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This article was written by

Cavenagh Research profile picture
3.72K Followers
5y experience as an investment analyst for a major BB-Bank. Currently working towards the CFA charter. Passion for risk-assets (Growth, Contrarian, Emerging Market) ex-colleague and close friend of Investor Express

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.

Additional disclosure: Not financial advise.

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