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What to Expect from Comcast’s Q4 Earnings

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Leading cable giant Comcast (NASDAQ: CMCSA) is set to report its Q4 earnings results before the market opens on January 23. Let’s see what investors can expect from the company’s Q4 2019 financial results.

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Comcast’s Q4 expectations

Wall Street analysts expect Comcast to post sales of $28.2 billion in the fourth quarter. This figure would mark a rise of 1.2% YoY (year-over-year) compared to $27.8 billion in Q4 2018. Also, analysts expect its earnings to rise by 18.8% YoY to $0.76 in the fourth quarter.

Currently, analysts expect 15.1% and 5.3% rises in the company’s 2019 and 2020 sales, respectively. Meanwhile, they expect 21.2% and 7.8% adjusted EPS growth in 2019 and 2020, respectively.

In the fourth quarter, Comcast expects to lose pay-TV subscribers. This is due to intense competition from over-the-top services like Netflix. But the company is likely to add new high-speed Internet customers in the fourth quarter as the demand for high-speed internet connection is growing.

Comcast’s peer Charter Communications (NASDAQ: CHTR) is likely to post sales of $11.7 billion in the fourth quarter. This would mark a rise of 4.5% YoY from sales of $11.2 billion in the fourth quarter of 2018. Also, analysts expect an adjusted EPS of $2.50 in Q4 2019 compared to $1.29 in Q4 2018.

Additionally, analysts expect Dish Network (NASDAQ: DISH) to post adjusted EPS of $0.59 on revenue of $3.2 billion in the fourth quarter.

Comcast’s Q3 performance

Comcast’s revenue rose 21.2% YoY to $26.8 billion in the third quarter, and it saw an adjusted EPS of $0.79. Analysts expected the company to report sales of $26.8 billion and adjusted EPS of $0.75.

In the third quarter, Comcast’s Cable segment lost a net of 238,000 video subscribers. This includes 222,000 residential customer net losses. Also, Comcast lost a net of 583,000 pay-TV customers in the first nine months of 2019. This is compared to 342,000 net losses in the first nine months of 2018.

At the end of September 2019, the company’s total number of pay-TV customers stood at 21.4 million, down 2.8% YoY. In comparison, Dish added 148,000 net pay-TV customers in the third quarter. Meanwhile, Charter Communications lost a net of 75,000 pay-TV customers.

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Comcast gained a net of 379,000 high-speed internet customers in the third quarter. This includes 359,000 residential customer net additions. Also, Comcast added 963,000 high-speed internet customers in the first nine months of 2019. This is compared to 1.0 million net additions in the first nine months of 2018.

At the end of September 2019, the company’s total number of high-speed Internet customers stood at 28.2 million, up 4.9% YoY. In comparison, Charter Communications added 380,000 net broadband customers in the third quarter.

Comcast’s Peacock service

In April, Comcast’s NBCUniversal segment is introducing an online ad-supported streaming service called Peacock. The service will launch with about 15,000 hours of content.

According to a FierceVideo report on December 30, “Comcast is planning to offer Peacock for free to its Comcast and Sky pay TV subscribers along with a subscription tier for consumers that don’t subscribe to Comcast’s pay TV services. But recent reports from CNBC (which is owned by Comcast) suggest that the company will make the service free for everyone to use.”

The report added, “NBCUniversal has been quiet regarding details about Peacock and outgoing CEO Steve Burke said that’s because of competitive reasons. But the company has made it clear that it won’t be competing against Netflix and will stick to the ad-supported side of streaming.”

Comcast’s Peacock will compete with AT&T’s HBO Max and Disney+. Also, HBO Max launches in May 2020, costing $14.99 per month. Meanwhile, Disney+ costs $6.99 per month.

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Analysts’ recommendations

Currently, Comcast stock has “buy” ratings from 30 out of 37 analysts, while seven have “hold” ratings. The stock’s average target price of $50.92 implies an 11.9% upside over the next 12 months. Also, Guggenheim has a target price of $54 on Comcast stock, down from $57 per share. Scotiabank also reduced its target price to $51 per share.

Let’s look at analysts’ ratings for the company’s competitors:

  • Analysts are bullish on Charter Communications stock. Among the 34 analysts that track the stock, 21 recommend “buy.” Also, analysts gave CHTR stock an average target price of $505.30. Analysts’ 12-month target price is at a discount of 0.4% to CHTR’s current stock price.
  • Among the 20 analysts covering Dish stock, eight have “buy” ratings, seven have “hold” ratings, and five have “sell” ratings. Analysts gave the stock an average target price of $41.96. Also, analysts’ 12-month target price is at a premium of 17.9% to Dish’s current stock price.

Stock performance

Comcast stock has risen 26.2% in the last 12 months. In comparison, Charter Communications stock has risen 70.4% in the last 12 months, while Dish has risen about 26.4%.

Comcast stock closed trading at $45.51 on January 9, rising 0.26% from the previous trading session. On January 9, CMCSA traded 3.7% below its 52-week high of $47.27 and 31.3% above its 52-week low of $34.67.

Based on Thursday’s closing price, CMCSA was trading as follows:

  • 2.7% above its 20-day moving average of $44.31.
  • 2.6% above its 50-day moving average of $44.36.
  • 1.6% above its 100-day moving average of $44.78.

Comcast has a 14-day relative strength index score of 61. So, this suggests that the stock is neither overbought nor oversold. The stock’s 14-day MACD is 0.46, which suggests an upward trading pattern.

Comcast stock trades at 13.66x its fiscal 2020 estimated adjusted EPS of $3.33. Plus, the stock trades at 12.91x its fiscal 2021 estimated adjusted EPS of $3.52. Additionally, the stock looks expensive if you look at its expected earnings growth of 7.8% and 5.7% in 2020 and 2021, respectively.

On January 9, Comcast’s dividend yield was 1.85%. By contrast, Charter Communications and Dish don’t pay stock dividends.

Read Comcast Likely to Buy Xumo’s Video Streaming Service to learn more about CMCSA.

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