Is Comcast Stock A Buy At $54?

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Comcast

Comcast stock (NASDAQ: CMCSA) increased close to 26% in the last six months and is currently trading at $54 per share. There are multiple factors behind this rally. The company has ventured into streaming with the launch of Peacock in mid-2020, at a time when demand for streaming shot up due to home confinement during the pandemic. Comcast’s broadband division, which accounts for 20% of its top line, grew by 10% in 2020 as the number of people suddenly working from home surged amidst lockdowns. The gradual lifting of lockdowns and successful vaccine rollout led to expectation of recovery in the company’s theme parks and studio businesses. Though the recent surge in Covid cases could delay this recovery, it should not be a major concern for Comcast as these two divisions together account for a little over 10% of total revenue. The company’s streaming, broadcast television, broadband, and business service divisions continue to grow. With ad spend by corporates also expected to rise in 2021, this trend will benefit Comcast as it is beefing up its advertising-selling technologies – One Platform and NBCUniversal Identification. As a measure to enhance shareholder returns, the management also increased the dividend by 9% in January 2021 which boosted the stock. But will Comcast’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for CMCSA stock average close to 8% in the next three-month (63 trading days) period after experiencing a 26% rise over the previous six-month (126 trading days) period. Notably, though, the stock is likely to outperform the S&P500 over the next three months, with an expected return which would be 4% higher compared to the S&P500.

But how would these numbers change if you are interested in holding CMCSA stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test CMCSA stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

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MACHINE LEARNING ENGINE – try it yourself:

IF CMCSA stock moved by -5% over five trading days, THEN over the next 21 trading days, CMCSA stock moves an average of 2 percent, which implies a return which is almost in line with that of the S&P500.

More importantly, there is 57% probability of a positive return over the next 21 trading days and 51% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of CMCSA Stock Movements:

Question 1: Is the average return for Comcast stock higher after a drop?

Answer:

Consider two situations,

Case 1: Comcast stock drops by -5% or more in a week

Case 2: Comcast stock rises by 5% or more in a week

Is the average return for Comcast stock higher over the subsequent month after Case 1 or Case 2?

CMCSA stock fares better after Case 1, with an average return of 1.9% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.6% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Comcast stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Comcast stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For CMCSA stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is generally lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

CMCSA’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Comcast stock by changing the inputs in the charts above.

Want upside from growing digitization post-Covid-19 but don’t want to pay a big premium for tech stocks? Check out our theme on Value Tech Stocks

 

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