Standing out among the Street's worst performers today is Comcast, a cable television company whose shares slumped -9.2% to a price of $39.2, 18.76% below its average analyst target price of $48.25.
The average analyst rating for the stock is buy. CMCSA lagged the S&P 500 index by -8.0% so far today and by -30.6% over the last year, returning 1.1%.
Comcast Corporation operates as a media and technology company worldwide. The company is in the communication services sector, which includes primarily companies with a cyclical profile whose share price is correlated with macro economic cycles. The exception is large telecom companies, which are more defensive in nature since their share prices have a looser correlation with recessions.
Comcast's trailing 12 month P/E ratio is 10.6, based on its trailing EPS of $3.71. The company has a forward P/E ratio of 9.0 according to its forward EPS of $4.38 -- which is an estimate of what its earnings will look like in the next quarter. As of the third quarter of 2024, the average Price to Earnings (P/E) ratio for US telecommunications companies is 20.57, and the S&P 500 has an average of 29.3. The P/E ratio consists in the stock's share price divided by its earnings per share (EPS), representing how much investors are willing to spend for each dollar of the company's earnings. Earnings are the company's revenues minus the cost of goods sold, overhead, and taxes.
To deepen our understanding of the company's finances, we should study the effect of its depreciation and capital expenditures on the company's bottom line. We can see the effect of these additional factors in Comcast's free cash flow, which was $16.26 Billion as of its most recent annual report. This represents the amount of money that is available for reinvesting in the business, or for paying out to investors in the form of a dividend. With its strong cash flows, CMCSA is in a position to do either -- which can encourage more investors to place their capital in the company. Over the last four years, the company's free cash flow has been growing at a rate of 1.4% and has on average been $16.31 Billion.
Value investors often analyze stocks through the lens of its Price to Book (P/B) Ratio (its share price divided by its book value). The book value refers to the present value of the company if the company were to sell off all of its assets and pay all of its debts today - a number whose value may differ significantly depending on the accounting method. Comcast's P/B ratio indicates that the market value of the company exceeds its book value by a factor of 1.75, but is still below the average P/B ratio of the Telecommunications sector, which stood at 2.36 as of the third quarter of 2024.
Comcast is likely fairly valued at today's prices because it has a Very low P/E ratio, a lower P/B ratio than its sector average, and generally positive cash flows with a flat trend. The stock has mixed growth prospects because of its decent operating margins with a stable trend, and an average PEG ratio. We hope this preliminary analysis will encourage you to do your own research into CMCSA's fundamental values -- especially their trends over the last few years, which provide the clearest picture of the company's valuation.
