Market Leader Comcast Stock at 36% Discount, Worth Buying?
Comcast (CMCSA) stock deserves your consideration. Why? Because you get high margins – reflective of pricing power and cash generation capacity – for a discounted price. Here is some data.
- Revenue Growth: Comcast saw growth of 1.3% LTM and 0.9% last 3 year average, but this is not a growth story
- Recent Profitability: Nearly 22.8% operating cash flow margin and 18.7% operating margin LTM.
- Long-Term Profitability: About 22.9% operating cash flow margin and 19.0% operating margin last 3 year average.
- Available At Discount: At P/S multiple of 0.9, CMCSA stock is available at a 36% discount vs 1 year ago.
While revenue growth helps, this is not a growth perspective. Pricing power and high margins generate consistent, predictable profits and cash flows, which reduce risk and allow capital to be reinvested. Market tends to reward that.
As a quick background, Comcast operates as a global media and technology company offering cable communications, television and streaming platforms, film studios, theme parks, and international media services.
| CMCSA | S&P Median | |
|---|---|---|
| Sector | Communication Services | – |
| Industry | Cable & Satellite | – |
| PS Ratio | 0.9 | 3.2 |
| PE Ratio | 6.8 | 23.6 |
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| LTM* Revenue Growth | 1.3% | 5.4% |
| 3Y Average Annual Revenue Growth | 0.9% | 5.3% |
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| LTM* Operating Margin | 18.7% | 18.7% |
| 3Y Average Operating Margin | 19.0% | 18.0% |
| LTM* Op Cash Flow Margin | 22.8% | 20.4% |
| 3Y Average Op Cash Flow Margin | 22.9% | 19.8% |
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| DE Ratio | 92.2% | 21.2% |
*LTM: Last Twelve Months
But do these numbers tell the full story? Read Buy or Sell CMCSA Stock to see if Comcast still has an edge that holds up under the hood.
Is holding CMCSA stock risky? Of course it is. High Quality Portfolio mitigates that risk.
Stocks Like These Can Outperform. Here Is Data
Here is how we make the selection: We consider stocks > $10 Bil in market cap, and then filter out those with high CFO (cash flow from operations) margins or operating margins. We additionally consider only those stocks that have meaningfully declined in valuation over the past 1 year.
Below are statistics for stocks with this selection strategy applied since 12/31/2016.
- Average 12-month forward returns of nearly 19%
- 12-month win rate (percentage of picks returning positive) of about 72%
But Consider The Risk
That said, CMCSA isn’t immune to big drops. It fell 44% in the Dot-Com Bubble and 62% during the Global Financial Crisis. The inflation shock saw a 52% pullback, while the 2018 correction and Covid pandemic each wiped out about 28-31%. Even solid companies feel the heat when markets turn sour. Risk is real, no matter the positives.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. 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.