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Key Takeaways from Comcast’s Q4 Earnings

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Comcast (NASDAQ:CMCSA) stock rose around 1.26% in the pre-market trading session today at 8:33 AM ET. The cable company reported better-than-expected fourth-quarter results before the market bell. Comcast beat analysts’ revenue and earnings estimates in the fourth quarter.

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Comcast beats fourth-quarter estimates

In the fourth quarter, Comcast posted an adjusted EPS of $0.79, which beat analysts’ expectations of $0.76 per share and its adjusted EPS of $0.64 in the fourth quarter of 2018. Comcast posted adjusted earnings growth of 23.4% YoY (year-over-year) in the fourth quarter of 2019. The company has exceeded the earnings expectations in the past 16 quarters.

Comcast reported revenues of $28.40 billion in the fourth quarter of 2019, which beat the consensus estimate of $28.17 billion by 0.8%. In the fourth quarter, the top line grew by 2.0% YoY. Cable Communications and Sky revenues improved YoY by 2.6% and 0.4% in the fourth quarter of 2019, respectively. Meanwhile, NBCUniversal’s revenues declined by 2.6% YoY. The company’s high-speed Internet segment drove its Cable Communications revenues in the fourth quarter.

Customer metrics

In the fourth quarter, the revenue from Comcast’s high-speed Internet segment grew by 8.8% YoY due to net additions of 442,000 total high-speed Internet customers. The number includes net additions of 424,000 residential high-speed Internet customers and additions of 18,000 business services high-speed Internet customers. Analysts forecasted 378,000 net additions of high-speed Internet customers in the fourth quarter of 2019. Comcast gained a net of 351,000 total high-speed Internet customers in the fourth quarter of 2018. At the end of December 31, Comcast’s total high-speed Internet customers stood at 28.63 million—up 5.2% YoY.

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Comcast lost 149,000 traditional video customers in the fourth quarter of 2019 compared to 29,000 losses in the fourth quarter of 2018. Analysts expected 139,000 net losses of video customers in the fourth quarter of 2019. At the end of December 31, Comcast’s total video customers stood at 21.25 million—down 3.3% YoY. The cable company is losing pay-TV subscribers due to competition from online video streaming services like Netflix and Amazon Prime Video.

According to a Reuters report today, “Comcast will be making its own entrance into the streaming video war on April 15, when it launches its advertising-supported Peacock streaming service to Comcast customers, followed by a launch across the United States on July 15.”

Comcast’s cash flows

In the fourth quarter, Comcast reported an adjusted FCF (free cash flow) of $2.48 billion compared to $2.06 billion in the fourth quarter of 2018. In the past eight quarters, Comcast has generated a minimum adjusted FCF balance of $2.0 billion in each quarter. The company’s net cash provided by operating activities was $6.24 billion in the fourth quarter.

The company is rewarding its shareholders with cash dividends due to its strong adjusted FCF. In the fourth quarter, the company paid $957 million in dividends. As of Wednesday, Comcast’s dividend yield was 1.77%.

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Expectations for 2020

Wall Street analysts expect an adjusted EPS of $3.29 in 2020—up more than 5% YoY. The adjusted EPS will likely rise by 5.8% in 2021 to $3.48 per share. Analysts expect Comcast’s revenues to rise by 5.1% in 2020 to $114.5 billion. The sales will likely rise by 1.6% in 2021 to $116.4 billion.

According to a CNBC report, this year “Comcast is focused on investing in broadband, helping users sort through apps, streaming and aggregation, as well as new expansions in theme parks. The company is also set to make some investments in Sky that will build growth for the years beyond 2020,” said Comcast CEO Brian Roberts.

Analysts’ recommendations

Among the 37 analysts tracking Comcast stock, 29 recommend a “buy”—down from 30 in the last month. About seven analysts recommend a “hold”—unchanged from the previous month. Meanwhile, one analyst recommends a “sell”—up from none in the last month. According to analysts’ consensus, Comcast stock has a 12-month mean target price of $51.06. The average target price is at a 7.6% premium to the current stock price. The median target was $51.00 on the same date.

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Peers’ fourth-quarter expectations

Charter Communications (NASDAQ:CHTR) is set to report its fourth-quarter results on January 31. In the fourth quarter, analysts expect its adjusted EPS to rise 93.0% YoY to $2.49 and its revenue to rise 4.5% YoY to $11.7 billion.

Wall Street analysts expect Dish Network’s (NASDAQ:DISH) adjusted EPS to decrease YoY to $0.59 from $0.64. Analysts also expect the company’s revenue to fall 4.8% YoY to $3.15 billion.

Comcast’s stock price movement

Comcast stock has risen 35.7% in the last 12 months. In comparison, Charter Communications stock has risen 79.2% in the last 12 months, while Dish has risen about 25.0%.

Comcast stock closed trading at $47.44 on Wednesday. The stock rose by 0.30% from the previous trading session. On Wednesday, Comcast traded 0.6% below its 52-week high of $47.74 and 36.8% above its 52-week low of $34.67.

Based on Wednesday’s closing price, the stock was trading as follows:

  • 4.0% above its 20-day moving average of $45.60.
  • 6.2% above its 50-day moving average of $44.67.
  • 5.4% above its 100-day moving average of $45.01.

Comcast has a 14-day relative strength index score of 70.4, which suggests that the stock is overbought. The stock’s 14-day MACD is 1.48, which suggests an upward trading pattern.

To learn more, read Comcast Likely to Buy Xumo’s Video Streaming Service.

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