Well known media and technology company, Comcast Corporation (CMCSA) in Philadelphia, Pa., has three primary businesses: Comcast Cable, NBCUniversal, and Sky. Investors have been concerned about the growing competition in the streaming space. Also, this month, the company’s cable unit’s president and CEO, David Watson, said at a conference that the company would end 2021 with a net addition of about 1.3 million broadband subscribers, compared to nearly 2 million in 2020. The stock has declined 9.7% in price over the past month to close yesterday’s trading session at $48.18.

CMCSA is currently trading 22% below its all-time high of $61.80, which it hit on September 2, 2021. 

However, CMCSA resumed its share repurchase program in May 2021, reflecting its confidence. And during its third quarter of fiscal 2021, it paid $1.20 billion in dividends. Furthermore, it reported the most wireless net additions in the third quarter since the launch of Xfinity Mobile in 2017. And its NBCUniversal results continue to be driven by the ongoing recovery at its domestic theme parks. So, CMCSA’s near-term prospects look promising.

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

Positive Developments

This month, YouTube TV was launched on CMCSA’s Xfinity Flex. And the Walt Disney Company (DIS) and CMCSA renewed their content carriage agreement in November to continue providing Xfinity customers access to content across their industry-leading platforms. Also, on November 19, NBCUniversal agreed to a six-year extension of its partnership to serve as exclusive U.S. Home of Premier League soccer. And on November 15, Sky and NBCUniversal announced plans to rollout Peacock content across Sky territories, beginning with a soft launch in the U.K. and Ireland.

Revenue Growth Across All Major Categories

CMCSA’s revenue increased 18.7% year-over-year to $30.30 billion for the third quarter, ended September 30, 2021. Its revenue for cable communications increased 7.4% year-over-year to $16.10 billion, while its revenue for NBCUniversal came in at $10 billion, up 57.9% year-over-year. In addition, its revenue for Sky increased 4.1% year-over-year to $5 billion.

CMCSA’s adjusted net income was  $4.04 billion, representing a 34.6% year-over-year rise. Its adjusted EBITDA increased 18.1% year-over-year to $8.96 billion, while its adjusted EPS increased 33.8% to $0.87. Also, its FCF increased 41.3% from the same period last year to $3.23 billion.

Reasonable Valuation

In terms of forward non-GAAP P/E, CMCSA’s 15.27x is 11.9% lower than the 17.33x industry average. The stock’s 0.86x forward non-GAAP PEG is 35% lower than the 1.33x industry average. In addition, its  8.98x and 2.32x respective forward EV/EBITDA and P/B are lower than the 9.32x and 2.62x industry averages.

Favorable Analysts Estimates

CMCSA’s revenue is expected to increase 7.3% for the current year, ending December 31, 2021, and 14.1% for the quarter ending March 31, 2022. And analysts expect its EPS to increase 22.2% this year and 16.3% next year. Moreover, its EPS is expected to grow at an 18.1% rate per annum over the next five years. Wall Street analysts expect the stock to hit $61.57 in the near term, which indicates a potential 27.8% upside.

POWR Ratings Show Promise

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

Our proprietary rating system also evaluates each stock based on eight distinct categories. CMCSA has a B grade for Stability, which is consistent with its 0.95 beta.

The stock has a B grade for Quality, which is in sync with its 66.59% trailing-12-month gross profit margin, which is 28.9% higher than the 51.66% industry average.

CMCSA is ranked #1 of 9 stocks in the Entertainment - TV & Internet Providers industry. Also, click here to see the additional POWR Ratings for CMCSA (Growth, Value, Momentum, and Sentiment).

Bottom Line

CMCSA’s shares have plunged in price since hitting their all-time high on September 2, 2021. However, the company has made several strategic collaborations and expanded its reach. In addition, its revenue grew across all major categories in the third quarter. So, we think it could be wise to buy the dip in the stock, given its favorable growth prospects.

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

CMCSA is the only B-rated stock in the Entertainment - TV & Internet Providers industry. Its industry peers, such as Altice USA, Inc. (ATUS), Cable One, Inc. (CABO), and DISH Network Corporation (DISH), have a C (Neutral) or D (Sell) rating.

CMCSA shares rose $0.13 (+0.27%) in premarket trading Thursday. Year-to-date, CMCSA has declined -6.40%, versus a 27.10% rise in the benchmark S&P 500 index during the same period.

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

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