Comcast stock (NASDAQ:CMCSA) has declined by about 20% year-to-date, currently trading at about $40 per share. The stock also remains down by about 35% from all-time highs seen in late 2021. The recent sell-off is driven by the broader decline in the markets amid surging inflation and the Federal Reserve’s increasingly hawkish stance. Comcast is also being weighed down by a couple of other factors. For one, the big surge the company witnessed in its bread and butter broadband business through the Covid-19 pandemic and work from home trend is cooling off. In Q1 2022, the company added just about 180,000 subscribers, adjusted for free subscribers, a sharp decline from 461,000 in the year-ago quarter. Moreover, the company’s cable business continues to bleed subscribers, with a record 512,000 subscribers leaving the service in Q1, compared to around 400,000 losses in the year-ago quarter. While Comcast’s Peacock streaming service, which the company is counting on to compensate for cable losses, has gained some traction, it continues to remain deeply lossmaking. First-quarter revenue for the service stood at $472 million with its EBITDA loss standing at $456 million.
However, despite these headwinds, we think that Comcast stock looks compelling at current levels. While revenue growth rates are likely to halve from around 12% last year to about 6% this year, per consensus estimates, the stock is trading at much more reasonable multiples. Comcast trades at just about 11x projected 2022 earnings, down from close to 20x at its 2021 peak. Moreover, Comcast’s core cable operations continue to expand, with adjusted operating profits rising 6.5% in Q1, with revenue also expanding despite the losses on the pay-TV front. Moreover, Comcast’s fledgling wireless business, which operates on the Verizon network, continues to grow strongly, with the total number of wireless lines on its network growing by 39% versus last year. Besides driving overall revenue growth, the wireless service is also helping to make Comcast’s broadband offerings more sticky. On the media and international business front, while the company’s Sky business is facing some currency-related headwinds, NBC Universal is seeing growth pick up, led by a surging theme park business and the broadcast of the Super Bowl and Olympics this year.
We value Comcast stock at about $55 per share, which is about 45% ahead of the current market price. See our analysis on Comcast Valuation for a closer look at what’s driving our price estimate for the company and how Comcast compares with its peers. Also, see our analysis of Comcast Revenue for more details on the company’s key revenue streams and how they have been trending.
|S&P 500 Return||-3%||-16%||79%|
|Trefis Multi-Strategy Portfolio||-7%||-22%||205%|
 Month-to-date and year-to-date as of 5/11/2022
 Cumulative total returns since the end of 2016