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How Comcast and Charter Wrapped Up 2019

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Comcast (CMCSA) stock closed the trading day on December 30 at $45.18, a rise of 0.18%. The stock is trading 4.4% lower than its 52-week high of $47.27 and 35.2% higher than its 52-week low of $33.42. Its market cap is $205.5 billion.

Comcast has seen its stock surge 32.7% since the beginning of 2019. Meanwhile, the stocks of its closest rivals Charter Communications (CHTR) and Dish Network (DISH) have risen 69.5% and 42.3%, respectively, year-to-date as of December 30. The benchmark S&P 500 Index is up 28.5%. The Dow Jones Industrial Average has risen 22.0%, while the Nasdaq Composite Index has climbed 34.8%.

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Comcast’s financial performance

Comcast reported adjusted EPS of $2.33 in the first nine months of 2019 compared to $2.02 during the same period in 2018, reflecting 15.3% YoY (year-over-year) growth. In the third quarter, the company posted adjusted EPS of $0.79 compared to $0.68 in the third quarter of 2018, reflecting 16.2% YoY growth.

Comcast reported revenue of $80.5 billion in the first nine months of 2019 compared to $66.7 billion during the same period in 2018, reflecting 20.8% YoY growth. In the third quarter, Comcast reported revenue of $26.83 billion, a YoY rise of 21.2% and a sequential fall of 0.1%. Its revenue came in above the consensus estimate of $26.77 billion. Its third-quarter YoY revenue growth was mainly the result of significant broadband customer additions.

In the first nine months of 2019, Comcast lost 583,000 pay-TV customers compared to 342,000 net losses in the first nine months of 2018. As of September 30, the company had 21.4 million traditional video customers, down 2.8% YoY. This reduction in traditional video customers resulted from the growing popularity of online video-streaming services.

In the first nine months of 2019, Comcast added 963,000 net broadband customers compared to 1.0 million net additions in the first nine months of 2018. As of September 30, the company had 28.2 million broadband customers, up 4.9% YoY.

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Comcast’s Peacock streaming service

Comcast’s NBCUniversal segment is preparing to launch its online video streaming service, Peacock, in April 2020. The service will launch with 15,000 hours of video content.

According to a PCMag report on December 27, “Peacock will exist in as many as three tiers. An ad-supported plan will let anyone stream Peacock’s library of content at no cost, and the number of advertisements displayed can be reduced for $5 per month. Additionally, Peacock will eliminate ads in exchange for $10 per month.”

NBCUniversal CEO Steve Burke will likely unveil more information about the Peacock streaming service on January 16, 2020. The upcoming service will compete with Disney+, Netflix, and Apple TV+. AT&T’s WarnerMedia segment is also preparing to launch video-streaming service HBO Max in May 2020.

Charter’s financial performance

Charter Communications reported adjusted EPS of $4.24 in the first nine months of 2019 compared to $3.21 in the same period in 2018, reflecting 32.1% YoY growth. In the third quarter, the company reported adjusted EPS of $1.74 compared to $1.36 in the third quarter of 2018, reflecting 27.9% YoY growth.

Charter Communications reported revenue of $34.0 billion in the first nine months of 2019 compared to $32.4 billion during the same period in 2018, reflecting 4.9% YoY growth. In the third quarter, Charter Communications reported revenue of $11.45 billion, implying YoY growth of 5.1% and sequential growth of 0.9%. Its revenue also came in above the consensus estimate of $11.41 billion.

In the first nine months of 2019, Charter Communications lost 379,000 residential pay-TV customers compared to 260,000 net losses in the first nine months of 2018. As of September 30, the company had 15.7 million residential pay-TV customers, down 2.6% YoY.

In the first nine months of 2019, Charter added 970,000 residential net broadband customers compared to 818,000 net additions in the first nine months of 2018. As of September 30, the company had 24.6 million residential broadband customers, up 5.4% YoY.

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2019 outlooks for Comcast and Charter

Analysts expect Comcast to report adjusted EPS of $0.76 and $3.09, respectively, in the fourth quarter and fiscal 2019. They also expect it to see fourth-quarter revenue of $28.2 billion, up 1.2% YoY. Analysts expect the company’s sales to rise 15.1% YoY in fiscal 2019.

In the fourth quarter, analysts expect Charter’s revenue to rise 4.5% YoY to $11.7 billion. Analysts expect its revenue to rise 4.8% YoY to $45.7 billion in fiscal 2019. They expect it to see adjusted EPS growth of 93.0% YoY to $2.49 in the fourth quarter. Analysts also foresee growth of 30.3% YoY to $6.80 in fiscal 2019.

Analysts’ recommendations for Comcast and Charter

Currently, 30 out of 37 analysts (or 81%) rate Comcast stock as a “buy,” while the rest call it a “hold.” Meanwhile, 21 out of 34 analysts (or 62%) have “buy” recommendations on Charter Communications stock. About 12 analysts have “hold” recommendations, while one has a “sell.”

Currently, analysts see more upside in Comcast stock over the next 12 months. The stock has a target price of $51.06 and a potential upside of 13.0% for the next 12 months. Charter stock has an average target price of $501.80 and a potential upside of around 3.9% over the next 12 months.

On December 30, Benchmark analyst Matthew Harrigan maintained his “buy” rating on Comcast stock with a price target of $64. Comcast is likely to acquire video-streaming company Xumo, according to the Wall Street Journal.

According to a report by The Fly, Harrigan “does not expect the deal to be material to the company’s financials, but he sees the assets as potentially offering a ‘further technical backbone’ ahead of Comcast’s expected April 2020 launch of Peacock streaming service acquired at a negligible price.”

Stock performance

Based on Comcast’s December 30 closing price, CMCSA was trading 3.1% above its 20-day moving average of $43.81, 1.7% above its 50-day moving average of $44.42, and 1.3% above its 100-day moving average of $44.61.

In comparison, Charter Communications fell 0.13% to close trading at $483.08 on December 30. The stock was trading 2.2%, 3.1%, and 9.8% above its 20-day, 50-day, and 100-day moving averages of $472.62, $468.69, and $439.88, respectively.

Comcast’s and Charter’s 14-day RSI scores are 61 and 62, respectively, indicating that both the stocks are neither “overbought” nor “oversold.”

To learn more, read Is Charter Stock an Attractive Buy at Its Current Price? and Inside Comcast’s Peacock Streaming Strategy.

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