It hasn't been a great morning session for Comcast investors, who have watched their shares sink by -1.4% to a price of $38.53. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
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 20.19 and an average price to book (P/B) ratio of 2.29. In contrast, Comcast has a trailing 12 month P/E ratio of 10.2 and a P/B ratio of 1.8.
Comcast's PEG ratio is 1.25, 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.
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 | $38.53 |
| 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 | 7.87 |
| 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.
