Today we're going to take a closer look at large-cap Telecommunications company Comcast, whose shares are currently trading at $40.83. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Comcast Corporation operates as a media and technology company worldwide. The company belongs to the Telecommunications sector, which has an average price to earnings (P/E) ratio of 18.85 and an average price to book (P/B) ratio of 3.12. In contrast, Comcast has a trailing 12 month P/E ratio of 30.5 and a P/B ratio of 2.07.
Comcast's PEG ratio is 1.5, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Shareholders Are Confronted With a Declining EPS Growth Trend:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $108,942 | $103,564 | $116,385 | $121,427 |
| Gross Margins | 68.4% | 68.0% | 67.0% | 68.5% |
| Operating Margins | 19.4% | 16.9% | 17.9% | 18.6% |
| Net Margins | 11.99% | 10.17% | 12.17% | 4.42% |
| Net Income (MM) | $13,057 | $10,534 | $14,159 | $5,370 |
| Net Interest Expense (MM) | -4,567 | -4,588 | -4,281 | -3,896 |
| Net Interest Expense (MM) | -$4,567 | -$4,588 | -$4,281 | -$3,896 |
| Depreciation & Amort. (MM) | -$12,953 | -$13,100 | -$13,804 | -$13,821 |
| Earnings Per Share | $2.83 | $2.28 | $3.04 | $1.34 |
| EPS Growth | n/a | -19.43% | 33.33% | -55.92% |
| Diluted Shares (MM) | 4,610 | 4,624 | 4,654 | 4,159 |
| Free Cash Flow (MM) | $13,269 | $13,103 | $17,089 | $12,646 |
| Capital Expenditures (MM) | -$12,428 | -$11,634 | -$12,057 | -$13,767 |
| Net Current Assets (MM) | -$152,776 | -$154,110 | -$153,089 | -$153,411 |
| Current Ratio | 0.84 | 0.93 | 0.85 | 0.78 |
| Long Term Debt (MM) | $97,765 | $100,614 | $92,718 | $93,068 |
| Net Debt / EBITDA | 2.82 | 2.91 | 2.3 | 3.28 |
Comcast has a steady stream of strong cash flows and stable revenues and a flat capital expenditure trend. Additionally, the company's financial statements display wider gross margins than its peer group and average operating margins with a stable trend. However, the firm has declining EPS growth. Finally, we note that Comcast has significant leverage.
