Should You Buy Comcast Stock Because Its Cash Outruns Its Earnings?
Comcast (CMCSA) has lost 19.2% over the past year, while the S&P 500 returned 18.5%, and the reason given is usually broadband: 167,000 subscribers gone in the June quarter. The stock trades at 0.7 times sales, its own ten-year low. The number that argues the other way is not an earnings figure. Free cash flow over the last twelve months ran at about 159% of reported net income.
Why Is Comcast Choosing To Earn Less From Broadband?
Most of the pressure on broadband revenue per customer is deliberate. Management did not take a broadband rate increase, migrated customers onto simplified pricing with lower everyday price points, and pushed free wireless lines that dilute broadband ARPU on day one. Broadband ARPU fell 3.8% in the June quarter. Spending on the customer experience behind the same shift contributed to a 5.8% decline in Connectivity & Platforms EBITDA.
The group adjusted EBITDA fell 5% in the June quarter, on two causes: management names, the go-to-market pivot, and the first year of the NBA rights contract, whose costs land before the revenue does. Management frames both as timing. The same quarter still produced $4.6 billion of free cash flow, of which $2.1 billion went back to shareholders. The repair is coming out of cash.
What Is Comcast Getting For The Revenue It Gave Up?
Comcast added 448,000 net wireless lines in the June quarter, its second consecutive record, with roughly half of residential postpaid phone connects coming from customers taking a free line. It ended the quarter with 10.2 million lines, 17% penetration of its domestic residential broadband customer base, and only 7% of the total wireless line opportunity in its footprint. Broadband losses still improved by 34,000 year over year.
Convergence ARPA, the value of the customer relationship once wireless is added to broadband, is roughly $85, well below what telecom competitors report. Each free line that converts to paid lifts that number from a low base, and management expects more to convert through the second half of 2026, though convergence ARPA fell 1.5% in the June quarter.
Can You Trust The Cash While Broadband Keeps Shrinking?
The case has edges. Parks softened more than management anticipated, with attendance across the broader Orlando market weakening in June and staying weak into the third quarter of 2026. Peacock turned its first profit in the June quarter, $189 million of EBITDA, though management expects that to swing with the sports calendar. Share repurchases have been paused since July 1 and stay that way until the media separation closes, roughly a year away on management’s plan. The cash keeps arriving; less of it comes back through the share count for now.
The options market prices the same uncertainty, with implied volatility in the 79th percentile of its own trailing one-year range. Cash conversion is not a forecast that broadband stops shrinking. It says Comcast can fund the repair itself while the argument is being settled, and a price at its ten-year low on sales suggests the market is giving that little credit. Our dip-buying screen puts the same question to other names the market has marked down.
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