Comcast Corp (CMCSA, Financial) has recently experienced a daily loss of -8.42%, with a 3-month loss of -8.15%. Despite these figures, the company's Earnings Per Share (EPS) stands at 1.58. These metrics have led many to question: Is Comcast (CMCSA) modestly undervalued? This article seeks to answer this question by providing an in-depth valuation analysis of Comcast (CMCSA). Read on to gain valuable insights into the company's financial performance and market value.
A Snapshot of Comcast Corp (CMCSA, Financial)
Comcast Corp (CMCSA) is a multifaceted company with three core components. The cable business, which provides television, internet access, and phone services to nearly half of the U.S. homes and businesses, NBCUniversal, acquired from General Electric in 2011, and Sky, the dominant television provider in the U.K. acquired in 2018. With a current stock price of $39.15, and a GF Value of $54.21, Comcast (CMCSA) appears to be modestly undervalued. This discrepancy between the stock price and the GF Value sets the stage for a deeper exploration of the company's intrinsic value.
Understanding the GF Value of Comcast (CMCSA, Financial)
The GF Value is an exclusive GuruFocus valuation method that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. If a stock price significantly deviates from the GF Value Line, it may indicate overvaluation or undervaluation, thus affecting future returns. In the case of Comcast (CMCSA), the stock appears to be modestly undervalued with a market cap of $161.50 billion.
As Comcast (CMCSA, Financial) is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth, potentially providing a lucrative opportunity for investors.
Evaluating the Financial Strength of Comcast (CMCSA, Financial)
Investing in companies with poor financial strength can pose a higher risk of permanent capital loss. Therefore, it is crucial to carefully review a company's financial strength before investing. In the case of Comcast (CMCSA), the company has a cash-to-debt ratio of 0.07, which is lower than 81.96% of companies in the Telecommunication Services industry. This indicates that the financial strength of Comcast (CMCSA) is somewhat weak.
Profitability and Growth of Comcast (CMCSA, Financial)
Investing in profitable companies typically carries less risk, especially if the company demonstrates consistent profitability over the long term. Comcast (CMCSA) has been profitable 10 years over the past 10 years. The company's profitability is strong, with an operating margin of 19.11%, which is better than 75.96% of companies in the Telecommunication Services industry.
One of the most important factors in a company's valuation is its growth. Comcast (CMCSA, Financial) has an average annual revenue growth of 5.1%, ranking it better than 57.29% of companies in the Telecommunication Services industry. However, its 3-year average EBITDA growth is -6.6%, ranking it lower than 78.08% of companies in the same industry.
ROIC vs WACC: A Measure of Profitability
Comparing a company's return on invested capital (ROIC) and its weighted average cost of capital (WACC) is another way to assess its profitability. For the past 12 months, Comcast's ROIC is 5.31, and its WACC is 8.46, indicating a need for improvement in its cash flow generation relative to the capital invested in its business.
Conclusion
In conclusion, Comcast (CMCSA, Financial) appears to be modestly undervalued. Despite its poor financial condition, the company's profitability is strong. However, its growth ranks lower than 78.08% of companies in the Telecommunication Services industry. To gain more insights into Comcast's stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
