Comcast: A 10x P/E 'Value' Stock After Weak Q2-Q3 Results

(Preview) Company Update (CMCSA US) (Buy)

Summary

• Comcast stock has fallen back to what it was five years ago, and now has a 10x P/E, a 10% Free Cash Flow Yield and a 3.1% Dividend Yield.

• The core Cable business has slowed significantly, with broadband subscriber net adds falling to close to zero since Q2 2022.

• However, this is largely due to macro, Cable's current earnings are not at risk and will likely still grow at low-single-digits.

• In NBC Universal, good growth in Theme Parks and Studios is offsetting weakness in Media (including rising losses in Peacock).

• With shares at $34.50, our forecasts indicate a total return of 68% (18.8% annualized) by 2025 year-end. Buy.

Introduction

In this article we review our investment case on Comcast.

Comcast’s share price is below what it was five years ago, having fallen 44% from its peak last September. Compared to when we initiated our Buy rating in January 2020, CMCSA stock has lost 16% (after dividends). The collapse in Comcast’s shares is an example of a “growth” stock having fallen to …