Comcast (NASDAQ:CMCSA) is poised to report its Q3 2023 results on October 26. We expect Comcast’s earnings to come in at $0.97 per share, marginally ahead of consensus estimates of $0.95 per share. We project that revenue will stand at about $29.80 billion, roughly in line with consensus estimates and roughly flat versus last year. So what are some of the key trends that are likely to drive the company’s earnings? See our interactive dashboard analysis on Comcast Earnings Preview for more details on how Comcast’s revenues and earnings are likely to trend for the quarter.
Amid this financial backdrop, CMCSA stock has seen little change, moving slightly from levels of $50 in early January 2021 to around $45 now, vs. an increase of about 15% for the S&P 500 over this roughly 3-year period. Overall, the performance of CMCSA stock with respect to the index has been lackluster. Returns for the stock were -4% in 2021, -31% in 2022, and 27% in 2023 (YTD). In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 14% in 2023 (YTD) – indicating an underperformance for the ticker in 2021 and 2022. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for other heavyweights in the Communication Services sector including GOOG, META, and TMUS, and even for the megacap stars TSLA, MSFT, and AMZN. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could CMCSA face a similar situation as it did in 2021 and 2022 and lose value over the next 12 months – or will it see a strong jump?
Comcast’s bread-and-butter broadband Internet business has seen a lackluster performance in recent quarters. For example, over Q2 2023, Comcast lost about 19,000 broadband customers. The slowdown comes as the boom witnessed through the Covid-19 pandemic and the remote working and learning trend has eased. Moreover, competition has been mounting from fixed wireless broadband players, who offer more flexibility and affordable rates. However, the company has been able to raise average pricing and this has helped overall revenue growth for the broadband business. While Comcast’s cable TV business is also likely to fare poorly, as the secular trend of cord-cutting continues, the company’s fledgling wireless services operations – which operate on the Verizon network and use the Xfinity brand name- are likely to remain a bright spot for the company. Over Q2, the division saw subscriber numbers rise 29.7% year over year to 5.9 million. The company’s content & experiences segment – which includes its media, studios, and theme parks – could be a mixed bag over the quarter as weak ad sales are likely offset by continued strength in theme parks.
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At the current market price of roughly $42 per share, Comcast trades at just about 12x consensus 2023 earnings. Although there remain near-term headwinds for the stock, including a weak ad market and slowing growth in the broadband space, Comcast has the potential to expand its earnings per share driven by share repurchases and margin expansion for the cable communication business via cost and efficiency improvements. We value Comcast stock at about $48 per share, about 8% ahead of the market price. See our analysis of 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||2%||14%||96%|
|Trefis Reinforced Value Portfolio||1%||24%||539%|
 Month-to-date and year-to-date as of 10/12/2023
 Cumulative total returns since the end of 2016