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What to Expect from Cable Giant Comcast’s Q1 Earnings

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Apr. 29 2020, Updated 9:53 a.m. ET

Comcast (NASDAQ:CMCSA) stock fell 0.34% on April 28 and closed at $38.08 with a market cap of $173.8 billion. The stock was trading 20.2% below its 52-week high of $47.74. Meanwhile, the stock was trading 20.1% above its 52-week low of $31.71.

On Tuesday, the S&P 500 and the Dow Jones indices fell by 0.52% and 0.13%, respectively. Charter Communications (NASDAQ:CHTR) and Dish Network (NASDAQ:DISH) returned -2.2% and 0.6%, respectively, on the same day.

What can investors expect from Comcast’s first-quarter results? The cable giant will likely report its earnings results for the March ended quarter on Thursday before the market open.

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Comcast’s Q1 earnings expectations

Wall Street analysts expect Comcast to report sales of $26.75 billion in the first quarter—a fall of 0.4% YoY (year-over-year) compared to $26.86 billion in the first quarter of 2019. Also, analysts expect the company’s adjusted EPS to fall by 10.5% YoY to $0.68 in the first quarter.

In the first quarter, Comcast could lose significant pay-TV customers due to cord-cutting. However, the company could gain new high-speed Internet subscribers in the first quarter. The demand for high-speed internet connection is growing. According to a MarketWatch report, “Cost-conscious consumers looking to cut back on their household expenses as the COVID-19 outbreak rocks the U.S. economy may take aim at pay-TV plans, warns Oppenheimer’s Timothy Horan, putting Comcast Corp. at risk.” The report also said, “The company is the most exposed to this scenario as it generates perhaps half its revenue from legacy TV, he wrote in a note downgrading Comcast’s stock to perform from outperform.”

Comcast’s free cash flow will likely decline to $3.19 billion from $5.14 billion a year ago. The company’s operating cash flow could fall 16.7% YoY to $6.0 billion. Meanwhile, the company’s capital expenditures could increase by 9% YoY to $2.28 billion in the first quarter. Comcast will likely return $1.03 billion to shareholders in the form of dividends. On Tuesday, the company’s dividend yield was 2.42%.

Analysts also expect Comcast’s revenues to fall by 2.7% YoY in 2020 to $106.0 billion. The sales could rise by 6.4% YoY in 2021 to $112.8 billion. The adjusted earnings will likely fall by 17.9% in 2020 to $2.57 per share. However, the profits could rise by 18.3% YoY to $3.04 per share in 2021.

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Analysts’ recommendations for Comcast stock

Comcast stock is tracked by 37 Wall Street analysts. Among the analysts, 26 recommend a “buy,” while 11 recommend a “hold.” None of the analysts recommend a “sell.” Analysts’ mean target price on the stock is $45.67, which implies a 20% gain from the current level of $38.08. The consensus target price for the stock has fallen from $48.78 in March—a fall of 6.4%.

Charter Communications and Dish Network have average broker target prices of $537.33 and $39.25, respectively. These figures imply returns of 8.1% and 60%, respectively, over the next 12 months.

Peer comparison

Charter Communications will likely release its earnings report for the first quarter on Friday. Analysts expect the company’s first-quarter reported revenue to rise by 5.2% YoY to $11.8 billion. They expect the company to post an adjusted EPS of $2.76 compared to $1.11 in the first quarter of 2019.

Wall Street expects Dish Network to report an adjusted EPS of $0.58 on revenue of $3.15 billion for the first quarter.

Comcast’s stock returns

Based on the closing price on Tuesday, Comcast stock was trading 4.2% above its 20-day moving average of $36.55. The stock is also trading 0.4% below its 50-day moving average of $38.23 and 8.2% below its 100-day moving average of $41.46.

Comcast’s 14-day RSI (relative strength index) number is 53.58. The number suggests that the stock isn’t oversold or overbought. Comcast has an upper Bollinger Band level of $39.80. The company’s middle Bollinger Band level is $36.55, while its lower Bollinger Band level is $33.29. On Tuesday, Comcast stock closed near its middle Bollinger Band level, which suggests that it isn’t oversold or overbought.

Comcast has forward PE ratios of 14.83x for 2020 and 12.54x for 2021. Wall Street analysts expect the company’s earnings to rise at a CAGR of 8.6% in the next five years.

Read Is Comcast Stock a Good Option for Investors? to learn more.

Stay tuned to learn how Comcast performed in the first quarter.

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