Media and technology company Comcast Corporation (CMCSA) operates through Comcast Cable, NBCUniversal, and Sky segments.

On October 17, 2022, CMCSA decided to increase speeds for its most popular Xfinity Internet tiers across 14 northeastern states. The company also launched new download speeds up to 2 gigabits-per-second – with up to 5x-to-10x faster upload speeds – for Xfinity customers in markets across the Northeast by 2022 end.

Frequent product diversifications and upgradation are expected to attract more customers and bode well for the company’s prospects.

CMCSA paid consecutive dividends for 13 years. Its dividend payouts have grown at 11.7% CAGR over the past five years and 8.9% CAGR over the past three years. Its current dividend yield is 3.50%, while its four-year average yield is 2.02%.

CMCSA has lost 10.7% over the past month to close the last trading session at $30.82. It has lost 38.8% year-to-date and 43% over the past year. However, Wall Street analysts expect the stock to hit $42.17 in the near term, indicating a potential upside of 36.8%.

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

Solid Financials

CMCSA’s revenue increased 5.1% year-over-year to $30.02 billion for the second quarter that ended June 30, 2022. Its operating income came in at $6.37 billion, up 15.6% year-over-year. Also, its adjusted net income came in at $4.51 billion, up 14.3% year-over-year, while its adjusted EPS came in at $1.01, up 20.2% year-over-year.

Attractive Valuations

CMCSA’s forward EV/EBITDA of 6.11x is 18.2% lower than the industry average of 7.47x. Its forward Price/Sales of 1.09x is 3.7% lower than the industry average of 1.13x. Also, its forward Price/Book of 1.42x is 17.7% lower than the industry average of 1.73x.

Moreover, its forward Price/Cash Flow of 4.75x is 40.5% lower than the industry average of 7.98x.

Robust Profit Margins

CMCSA’s trailing-12-month gross profit margin of 67.34% is 33.3% higher than the industry average of 50.52%. Its trailing-12-month EBITDA margin of 29.82% is 60.1% higher than the industry average of 18.63%, while its trailing-12-month net income margin of 11.54% is 104% higher than the industry average of 5.66%.

In addition, its trailing-12-month ROCE, ROTC, and ROTA of 15.06%, 7.07%, and 5.26%, compared with the industry averages of 6.66%, 3.66%, and 2.45%, respectively.

POWR Ratings Reflect Promising Outlook

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

The stock has a B grade for Value and Quality, consistent with its lower-than-industry valuation multiples and higher-than-industry profitability margins, respectively.

In the 9-stock Entertainment – TV & Internet Providers industry, CMCSA is ranked first.

Click here for the additional POWR Ratings for CMCSA (Growth, Momentum, Stability, and Sentiment).

View all the top stocks in the Entertainment – TV & Internet Providers industry here.

Bottom Line

CMCSA reported solid financials in the last reported quarter. Moreover, its revenue and EPS are estimated to grow 4.4% and 11.5% year-over-year to $121.49 billion and $3.60 in 2022, respectively. Given the stock’s attractive valuations and robust profitability, I think CMCSA might be an ideal addition to your portfolio.

CMCSA shares were trading at $31.28 per share on Tuesday morning, up $0.46 (+1.49%). Year-to-date, CMCSA has declined -36.20%, versus a -20.32% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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