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Comcast Stock Slumps despite Q3 Earnings Beat

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Comcast (CMCSA) reported better-than-expected third-quarter results today before the market bell. However, Comcast stock was down 1.4% today at 1:12 PM ET.

For the third quarter, Comcast reported adjusted earnings of $0.79 per share, which beat Wall Street expectations of $0.75 per share and its adjusted earnings of $0.65 per share in the third quarter of 2018. Comcast posted adjusted earnings growth of 21.5% year-over-year in Q3 of 2019. The media company has beaten earnings expectations in the past 15 quarters.

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Comcast posted revenues of $26.83 billion in Q3 of 2019, beating the consensus estimate of $26.77 billion by 0.2%. In the third quarter, the top line grew 21.2% year-over-year, driven by growth in its Cable Communications segment and offset by a decline in the NBCUniversal and Sky businesses. While cable communications’ revenues improved by 4.0%, NBCUniversal and Sky revenues fell 3.5% and 4.2% year-over-year in Q3 2019, respectively. The company’s high-speed Internet business drove its cable communications revenues in the third quarter.

Comcast’s customer metrics

In the third quarter, revenue from the high-speed Internet segment grew 9.3% year-over-year, driven by net additions of 379,000 total high-speed internet subscribers. That number includes net additions of 359,000 residential high-speed internet subscribers and additions of 20,000 business services high-speed internet subscribers.

Analysts had forecast 344,000 net high-speed internet customers in Q3 2019. Comcast gained a net of 363,000 total high-speed internet subscribers in the corresponding quarter last year. At the end of September 30, Comcast’s total high-speed internet customers stood at 28.2 million—up 4.9% year-over-year.

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Comcast lost 238,000 traditional video customers in Q3 2019, versus 106,000 losses in the prior-year quarter. Analysts had forecast 203,000 net video customers in Q3 2019. The company is losing pay-TV customers due to competition from over-the-top (or OTT) streaming services like Netflix and Amazon Prime Video.

The company’s NBCUniversal segment intends to launch its OTT streaming video service, named Peacock, in April 2020.

Comcast’s cash flows

In the third quarter, Comcast reported adjusted free cash flow (or FCF) of $2.1 billion versus $3.1 billion in the third quarter of 2018. In the last seven quarters, the company has maintained a minimum adjusted FCF balance of $2.0 billion in each quarter. Its net cash provided by operating activities was $5.2 billion in the third quarter.

The company is committed to rewarding its shareholders with cash dividends due to strong adjusted FCF. In the third quarter, the company paid $955 million in dividends. As of October 23, Comcast’s dividend yield was 1.84%.

CMCSA stock performance

On October 23, Comcast stock fell 0.11% and closed at $45.72 with a market cap of $207.8 billion. CMCSA is trading 3.3% below its 52-week high of $47.27. The stock is trading 40.2% above its 52-week low of $32.61.

The stock has generated returns of 28.3% in the trailing 12-month period and -1.1% in the trailing one-month period. Comcast’s share price has risen 0.3% in the trailing five-day period.

Year-to-date, Comcast stock has risen 34.3% through October 23. And during this period, Charter Communications (CHTR) and Dish Network (DISH) have risen 52.8% and 39.9%, respectively.

In the third quarter, Charter Communications is likely to report an adjusted EPS of $1.65 on revenue of $11.4 billion. Meanwhile, DISH is likely to report an adjusted EPS of $0.61 on revenue of $3.2 billion.

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