Comcast Corp (CMCSA, Financial) recently recorded a daily gain of 1.01%, marking a 3-month gain of 17.95%. With an Earnings Per Share (EPS) of 1.58, the question arises: Is the stock modestly undervalued? This article delves into a comprehensive valuation analysis of Comcast (CMCSA). So, let's delve in.
Company Overview
Comcast Corp is a multifaceted entity, owning networks capable of providing television, internet access, and phone services to nearly half of the U.S. homes and businesses. With its acquisition of NBCUniversal from General Electric in 2011, and Sky in 2018, Comcast has solidified its presence in the media and entertainment industry. The company's stock price currently stands at $47.03, with a market cap of $194 billion. Our GF Value estimates the stock's fair value at $53.8, suggesting that Comcast (CMCSA, Financial) may be modestly undervalued.
A Summary of GF Value
The GF Value is a proprietary calculation of a stock's intrinsic value, incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
At its current price of $47.03 per share, Comcast has a market cap of $194 billion and appears to be modestly undervalued. Because Comcast is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. To avoid this, it's crucial to review a company's financial strength before deciding to purchase shares. Comcast has a cash-to-debt ratio of 0.07, which ranks worse than 80.75% of companies in the Telecommunication Services industry. The overall financial strength of Comcast is 4 out of 10, indicating poor financial strength.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Comcast has been profitable 10 years over the past decade. Its operating margin is 19.11%, which ranks better than 75.9% of companies in the Telecommunication Services industry. Overall, the profitability of Comcast is ranked 8 out of 10, indicating strong profitability.
Growth is one of the most crucial factors in a company's valuation. Comcast's 3-year average revenue growth rate is better than 56.54% of companies in the Telecommunication Services industry. However, Comcast's 3-year average EBITDA growth rate is -6.6%, which ranks worse than 77.84% of companies in the Telecommunication Services industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) can provide insights into its profitability. For the past 12 months, Comcast's ROIC is 5.31, and its cost of capital is 8.15.
Conclusion
In conclusion, the stock of Comcast (CMCSA, Financial) appears to be modestly undervalued. The company's financial condition is poor, and its profitability is strong. Its growth ranks worse than 77.84% of companies in the Telecommunication Services industry. To learn more about Comcast stock, you can check out its 30-Year Financials here.
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