Key Insights for Investors in Comcast Stock

It's been a great morning session for Comcast investors, who saw their shares rise 1.3% to a price of $39.49 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

The Market May Be Undervaluing Comcast's Assets and Equity:

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 23.78 and an average price to book (P/B) ratio of 3.46. In contrast, Comcast has a trailing 12 month P/E ratio of 10.6 and a P/B ratio of 1.9.

P/E rations can be placed into context by dividing them by the firm's expected 5-year EPS growth rate, which gives us its Price to Earnings Growth (PEG) ratio. Comcast's PEG ratio is 1.02, which tells us the company is fairly valued in terms of growth. PEG ratios under 1 are considered an indicator of undervalued growth, but we need to keep in mind that many successful companies with excellent share performance have maintained much higher PEG ratios.

As always, a quantitative approach to a stock should be supplemented with a look at qualitative factors, such as the competence of its management team, quality of its corporate culture, and the wide variety of social and economic factors that can impact the success of its product.

Growing Revenues but Not Enough Current Assets to Cover Current Liabilities:

2018 2019 2020 2021 2022 2023
Revenue (M) $94,507 $108,942 $103,564 $116,385 $121,427 $121,572
Operating Margins 20% 19% 17% 18% 12% 19%
Net Margins 12% 12% 10% 12% 4% 13%
Net Income (M) $11,731 $13,057 $10,534 $14,159 $5,370 $15,388
Net Interest Expense (M) $3,542 $4,567 $4,588 $4,281 $3,896 $4,087
Depreciation & Amort. (M) $8,281 $8,663 $8,320 $8,628 $8,724 $8,854
Diluted Shares (M) 4,640 4,610 4,624 4,654 4,430 4,148
Earnings Per Share $2.53 $2.83 $2.28 $3.04 $1.21 $3.71
EPS Growth n/a 11.86% -19.43% 33.33% -60.2% 206.61%
Avg. Price $31.83 $38.38 $39.87 $51.89 $43.51 $39.42
Free Cash Flow (M) $14,523 $15,744 $15,558 $19,972 $15,787 $16,259
CAPEX (M) $9,774 $9,953 $9,179 $9,174 $10,626 $12,242
EV / EBITDA 5267895.95 5854138.96 10.64 10.91 12.42 7.99
Total Debt (M) $111,743 $102,217 $103,760 $94,850 $94,811 $97,090
Net Debt / EBITDA 3.95 3.25 3.56 2.93 3.96 2.83
Current Ratio 0.79 0.84 0.93 0.85 0.78 0.6

Comcast has growing revenues and increasing reinvestment in the business, positive EPS growth, and generally positive cash flows. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.6. Finally, we note that Comcast has decent operating margins with a stable trend and significant leverage levels.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.