Comcast Corporation (CMCSA) is a leading global media and technology company with more than 57 million customer relationships across the United States and Europe. Its famous brands include Universal Studio Group, NBC network, and Universal Parts and Resort.

The company’s impressive growth strategies to boost its business have been attracting investors over the past year, as evident from CMCSA’s 35.7% gain during this period. In fact, CMCSA’s strategic joint venture with ViacomCBS Inc. (VIAC), announced on August 18, led to the stock gaining 3.5% since the announcement to hit its all-time high of $61.80 on September 2.

Here’s what could shape CMCSA’s performance in the near term:

ViacomCBS Joint Venture

On August 18, CMCA partnered with VIAC to launch a new subscription video-on-demand service SkyShowtime in more than 20 countries. Expected to launch next year, this global content engine aims to reach more than 90 million European homes, thereby strengthening both CMCSA and VIAC’s foothold in Europe.

Acquisition to Accelerate Growth

On August 25, CMCSA signed an agreement to acquire software-defined networking and cloud platform Masergy, subject to regulatory approval. This acquisition should enhance CMCSA’s capabilities to cater to large and mid-sized multinational companies by managing their international operations and networks more efficiently and securely. Regarding this, CMCSA President Bill Stemper said, “Masergy provides a perfect complement to our portfolio of enterprise services and solutions and will allow us to instantly and dramatically amplify our growth in the global enterprise market.”

Stable Growth Prospects

Analysts expect CMCSA’s revenues to rise 7.7% in the fiscal fourth quarter (ending December), 11.3% in 2021, and 6.5% next year. The consensus EPS estimates indicate a 41.1% year-over-year improvement in the next quarter, a 19.5% rise from the same period last year in the ongoing year, and a 22.1% increase from the year-ago value in 2022.

In addition, CMCSA’s EPS is expected to rise at an 18.7% CAGR over the next five years. The company has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.

Discounted Valuation

Despite double-digit price gains over the past year, CMCSA is undervalued, considering its growth potential. In terms of forward P/E, CMCSA is currently trading at 21.07x, 2.9% lower than the industry average of 21.70x. In addition, its 1.40 non-GAAP forward PEG ratio is 21% lower than the industry average of 1.77.

Moreover, CMCSA’s forward EV/EBIT and Price/Book multiples of 18.13 and 2.82 compare favorably with the industry averages of 18.35 and 2.83, respectively.

Consensus Price Target and Rating Indicate Potential Upside

Despite hitting its all-time high on August 30, analysts expect CMCSA to rise further. The 12-month median price target of $67.29 indicates an 11.6% potential upside from yesterday’s closing price of $60.30. The price targets range from a low of $60.00 to a high of $75.00. Of the 18 Wall Street analysts that rated the stock, 15 rated it Buy, while two rated it Hold and one rated it Sell.

POWR Ratings Reflect Rosy Prospects

CMCSA has an overall grade of B, which equates to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

CMCSA has a B grade for Stability and Quality. The company’s 11.44% net income margin, which is 110.1% higher than the industry average of 5.44%, is in sync with the Quality grade.

Of the nine stocks in the Entertainment – TV & Internet Providers industry, CMCSA is ranked #1.

Beyond what is stated above, we have graded CMCSA for Growth, Sentiment, Momentum, and Value. Get all CMCSA ratings here.

Bottom Line

CMCSA is one of the largest media and entertainment companies in the United States, with a $276.8 billion market cap. In addition, the company’s latest efforts to expand its international businesses through joint ventures and acquisitions should allow it to become a global leader in this space. Currently trading above its 50-day and 200-day moving averages of $59.08 and $56.74, shares of CMCSA have plenty of upside left, despite hitting an all-time high recently. Thus, the stock should be a valuable addition to your portfolio now.

How Does Comcast Corporation (CMCSA) Stack Up Against its Peers?

CMCSA has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. This rating is superior to its peers in the Entertainment – TV & Internet Providers industry such as Liberty Global plc (LBTYK), Altice USA, Inc. (ATUS), and Charter Communications Inc. (CHTR), which have a C (Neutral) rating.

CMCSA shares were trading at $60.10 per share on Wednesday afternoon, down $0.20 (-0.33%). Year-to-date, CMCSA has gained 16.24%, versus a 21.31% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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