Comcast Corporation (CMCSA) is a global media and technology company that connects people to moments that matter. With 57 million customer relationships across the United States and Europe, it primarily focuses on broadband, aggregation, and streaming. It provides broadband, wireless, and video services through Xfinity, Comcast Business, and Sky brands.

CMCSA will pay a $0.27 quarterly cash dividend on August 26, 2022. The stock pays a $1.08 per share dividend annually, translating to a 2.8% yield. The company’s dividend has grown at a 12% rate over the past five years. CMCSA has increased its dividends for two consecutive years.

This month, CMCSA announced a strategic partnership with Fortinet (FTNT), a global leader in broad, integrated, and automated cybersecurity solutions, to provide enterprises with a new set of secure access service edge (SASE) and security service edge (SSE) solutions to help enterprises protect their distributed workforces through a cloud-delivered approach to security policy enforcement.

This collaboration broadens CMCSA's managed services expertise while providing enterprises with greater flexibility in selecting the cloud architecture and vendor mix that is best for them.

Here's what could shape CMCSA's performance in the near term:

Robust Financials

During the second quarter ended March 26, 2022, CMCSA's revenue increased 5.1% year-over-year to $30.02 billion. Its adjusted EBITDA grew 10.1% from the year-ago value to $9.83 billion. The company’s net income came in at $3.39 billion. Its adjusted EPS grew 20.2% from the year-ago value to $1.01.

Strong Profitability

CMCSA's trailing-12-month gross profit margin of 67.3% is 32.7% higher than the industry average of 50.7%. Also, its ROC, net income margin and ROA are 102.6%, 149.3%, and 126.1% higher than their respective industry averages. Furthermore, its EBITDA margin of 29.8% is 60.3% higher than the industry average of 18.6%.

Discounted Valuation

In terms of trailing-12-month non-GAAP P/E, the stock is currently trading at 10.63x, 41.1% lower than the industry average of 18.05x. Also, its trailing-12-month EV/EBIT of 11.37x is 28.1% lower than the industry average of 15.81x. Moreover, CMCSA's forward Price/Cash Flow of 6.05x is 32.8% lower than the industry average of 9.01x.

Impressive Growth Prospects

Street expects CMCSA's revenues and EPS to rise 4.6% and 11.5% year-over-year to $121.76 billion and $3.6 in fiscal 2022. In addition, its EPS is expected to rise at the rate of 10.2% per annum over the next five years.

Consensus Rating and Price Target Indicate Potential Upside

Of the 22 Wall Street analysts that rated CMCSA, 12 rated it Buy, and seven rated it Hold. The 12-month median price target of $46.98 indicates a 21.7% potential upside. The price targets range from a low of $33.00 to a high of $60.00.

POWR Ratings Reflect Solid Prospects

CMCSA has an overall grade of B, equating to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. CMCSA has a B grade for Quality and Stability. Its strong profitability is consistent with the Quality grade. The stock beta of 0.91 is in sync with the Stability grade.

Of the nine D-rated Entertainment – TV & Internet Providers industry stocks, CMCSA is ranked #1.

Beyond what I stated above, we have graded CMCSA for Sentiment, Growth, Value, and Momentum. Get all CMCSA ratings here.

Bottom Line

The company reported solid revenue and earnings growth in the last reported quarter. In addition, CMCSA’s strategic collaborations have increased its market reach.

Moreover, with its discounted valuation and favorable analyst ratings, the stock is poised to soar in the near term. So, we believe the stock could be a great buy now.

How Does Comcast Corporation (CMCSA) Stack Up Against its Peers?

CMCSA has an overall POWR Rating of B, which equates to a Buy rating. Check out this other stock within the same industry with B (Buy) rating: Charter Communication Inc. (CHTR).

CMCSA shares were trading at $38.22 per share on Tuesday afternoon, down $0.37 (-0.96%). Year-to-date, CMCSA has declined -22.74%, versus a -12.90% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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