Strong Cash Yield: Is Comcast Stock A Buy?
Comcast (CMCSA) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market
CMCSA Has Good Fundamentals
- Good Cash Yield: Not many stocks offer free cash flow yield of 19.2%, but Comcast stock does
- Strong Margin: Last 12 month operating margin of 16.7%
- Growth: Last 12 revenue growth of -0.02% – revenue decline, but this selection is all about high yield and margin
- Valuation: CMCSA stock is currently trading at 31% below its 2Y high, 12% below its 1M high, and at a PS lower than the 3Y average.
Below is a quick comparison of CMCSA fundamentals with S&P medians.
| CMCSA | S&P Median | |
|---|---|---|
| Sector | Communication Services | – |
| Industry | Cable & Satellite | – |
| Free Cash Flow Yield | 19.2% | 4.3% |
| Revenue Growth LTM | -0.0% | 6.8% |
| Revenue Growth 3YAVG | 0.6% | 5.5% |
| Operating Margin LTM | 16.7% | 18.6% |
| Operating Margin 3YAVG | 18.2% | 18.1% |
| PE Ratio | 5.0 | 24.0 |
*LTM: Last Twelve Months
But What Is The Risk Involved?
While CMCSA stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Comcast slid 44% in the Dot-Com crash, 62% during the Global Financial Crisis, and 52% in the inflation shock. Even the milder pullbacks — like 2018 and the Covid selloff — hit around 28-31%. Solid fundamentals only go so far. When markets turn sour, big dips still happen.
For more details and our view, see Buy or Sell CMCSA Stock.
Stocks Like CMCSA
Not ready to act on CMCSA? Consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Dipped last month & meaningfully below 2Y high
- Current P/S < last few years average
- Strong operating margin with no instances of large margin collapse
- High free cash flow yield
A portfolio of stocks with the criteria above would have performed as follows since 12/31/2016:
- Average 6-month and 12-month forward returns of 10.4% and 20.4%, respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Strategy consistent across market cycles
Smart Investing Begins With Portfolios
Stocks soar and sink – the key is staying invested. A balanced portfolio helps you ride market volatility, boosts gains, and reduces single stock risk.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.