Comcast: Consider Adding More?

Applause for debt reduction


In the midst of the net neutrality scuttle, investors should consider adding?

As of its recent nine months operations, Comcast, a $170 billion Comcast Cable and NBCUniversal operator, generated 61.6% of its business revenue from its cable communications (excluding eliminations).

According to filings, Comcast’s Cable Communications consists of the operations of Comcast Cable, which is one of the nation’s largest providers of video, high-speed Internet, voice, and security and automation services to residential customers under the XFINITY brand; Comcast also provides these and other services to business customers and sell advertising.

The cable communications also reported an operating margin of 24.8% compared to 24.85% a year earlier.

Comcast’s NBCUniversal cable networks business, meanwhile, generated about 9% revenue has delivered more profitability at 31.5% (vs. 28% a year earlier).

Overall, Comcast reported revenue rise of 4.2% year over year for its nine months of operations to $48.7 billion along with a 20.8% increase in profits to $7.7 billion.

From December, the media company also increased its cash by $813 million to $4.1 billion as of September. This is despite its responsible $5.1 billion reduction as a result of financing activities (includes $2.1 billion dividend payouts and $4.2 billion buybacks).

The company, nonetheless, has a debt-equity ratio of 1.17x (vs. 1.13x a year earlier).

In addition, Comcast had 818 thousand more total high-speed internet customers to 25.5 million as of September.

Comcast’s video and voice customers, meanwhile, lost 118 thousand and 122 thousand, respectively in the same period.

In the past three years, Comcast generated $25.7 billion in free cash flow and allocated $23.3 billion in dividends and share buybacks. The company also raised $8.9 billion in debt (net repayments).

Analysts have an average buy recommendation with a target price that is 23% higher than today’s price of $36.32 to $44.83.

Using historical growth rates and multiples with a 15% margin on the company’s revenue figures indicated a per share figure of $33 a share.

Disclosure: I have CMCSA preferred shares.

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