21 Apr

Gauging Comcast’s Valuation Metrics before Its 1Q17 Earnings

WRITTEN BY Shirley Pelts

Valuation metrics

In this part of the series, we’ll look at some key metrics you can use to compare media companies’ valuation. We’ll specifically look at media valuation multiples, which can be used to value conglomerates.

To measure valuation, the PE (price-to-earnings), EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization), PCF (price-to-cash-flow), and PFCF (price-to-free-cash-flow) multiples are often used.

Price-based multiples take into account value from a shareholder’s perspective. EV-based multiples help investors understand a company’s value through its sources of capital from a shareholder’s point of view. These are forward multiples based on expected value after a year.

Gauging Comcast’s Valuation Metrics before Its 1Q17 Earnings

Is Comcast undervalued?

On a forward EV-to-EBITDA basis, Comcast (CMCSA) appears undervalued compared with peers. As the graph above indicates, Comcast has a forward EV-to-EBITDA multiple of 8.2x and a PE multiple of 17.5x. In contrast, The Walt Disney Company (DIS) has a forward EV-to-EBITDA multiple of 10.6x and a PE multiple of 17.0x. Peers 21st Century Fox (FOXA) and Time Warner (TWX) have forward EV-to-EBITDA multiples of 9.7x and 10.6x, respectively.

Comcast’s value proposition

Comcast’s strategic initiatives to boost its brand, including its entry into the wireless space and the integration of Netflix (NFLX) into its X1 platform, should enable it to handle the increasing competition in the media industry. The company’s acquisition of DreamWorks Animation has strengthened its position in the industry.

Comcast makes up 0.82% of the SPDR S&P 500 ETF (SPY). SPY invests 3.4% of its holdings in the computer sector.

Latest articles

In Q3, billionaire investor Leon Cooperman's top five holdings were Fiserv, Alphabet, United Continental, Chimera Investment, and Cigna.

In 2018, 3,503 metric tons of gold were produced globally, 1.8% higher than in 2017. Let's look at the world's top gold-producing countries.

TJX Companies (TJX) reported better-than-expected earnings results for the third quarter of fiscal 2020, which ended on November 2.

Despite Canada's legalization of cannabis a year ago, a StatCan survey found that 42% of Canadians have obtained their cannabis from illegal sources.

On November 11, the NHS (National Health Service) approved two cannabis-based medicines, Epidyolex and Sativex, for use in the United Kingdom.

Roku (ROKU) stock tanked more than 5% on Tuesday during market hours. The company said it will issue nearly 1 million common shares today.