Cable stock Comcast Corporation (CMCSA) recently announced the world's first live, multigigabit symmetrical Internet connection powered by 10G and Full Duplex DOCSIS 4.0.
Charlie Herrin, President, Technology, Product, Experience at CMCSA Cable, said, "This live trial combines years of technology innovation and versatility to create a clear path to next-generation speed, reliability and performance for all the homes in our footprint, not just a select few."
Moreover, demand for the cable industry is expected to expand rapidly in the coming years. According to The Insight Partners' the global high-speed cable market is expected to grow at a CAGR of 6.9% until 2028.
Furthermore, CMCSA paid consecutive dividends for 13 years. Its dividend payouts have grown at 11.4% CAGR over the past five years and 8.7% CAGR over the past three years. Its current dividend yield is 2.77%, while its four-year average yield is 2.09%.
CMCSA has lost 2.4% over the past six months to close the last trading session at $38.93. However, it has gained 6.1% over the past month and 28.8% over the past three months.
Here is what could shape CMCSA's performance in the near term:
Steady Bottom-line Growth
CMCSA's adjusted net income came in at $4.22 billion for the third quarter that ended September 30, 2022, up 4.5% year-over-year, while its adjusted EPS came in at $0.96, up 10.3% year-over-year.
Also, its adjusted EBITDA increased 5.9% year-over-year to $9.48 billion. Moreover, its free cash flow came in at $3.39 billion, reflecting a 4.7% year-over-year increase.
Attractive Valuations
CMCSA's forward EV/EBITDA of 7.09x is 17.7% lower than the industry average of 8.61x. Its trailing-12-month non-GAAP P/E of 10.81x is 23.3% lower than the industry average of 14.10x. Moreover, its forward Price/Cash Flow of 6.18x is 33.5% lower than the industry average of 9.29x.
Robust Profitability Margins
CMCSA's trailing-12-month gross profit margin of 68.41% is 36% higher than the industry average of 50.32%. Its trailing-12-month EBITDA margin of 30.40% is 60.4% higher than the industry average of 18.95%.
In addition, its trailing-12-month ROCE and ROTC of 6.14% and 7.55% compare with the industry averages of 5.81% and 3.83%, respectively.
POWR Ratings Reflect Promising Outlook
CMCSA has an overall rating of B, which equates to a 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.
Our proprietary rating system also evaluates each stock based on eight distinct categories. CMCSA has a B grade for Quality, consistent with its higher-than-industry profitability margins.
It has a C grade for Sentiment. Analysts expect CMCSA's revenue to decline marginally year-over-year to $120.01 billion in 2023. However, its EPS is expected to increase by 3.6% year-over-year to $3.73.
In the 9-stock Entertainment - TV & Internet Providers industry, CMCSA is ranked first.
Click here for the additional POWR Ratings for CMCSA (Growth, Value, Momentum, and Stability).
View all the top stocks in the Entertainment – TV & Internet Providers industry here.
Bottom Line
CMCSA reported solid bottom-line growth in the last reported quarter. Moreover, Wall Street analysts expect the stock to hit $42.64 soon, indicating a potential upside of 9.5%. Also, 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 $38.93 per share on Monday morning, up $0.24 (+0.62%). Year-to-date, CMCSA has gained 12.19%, versus a 4.20% 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.
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