Market Capitalization $153.5 Billion

Transcription

1 BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F BUY November 22, 2015 BUY RATING SINCE 04/27/2010 TARGET PRICE $72.33 BUSINESS DESCRIPTION Comcast Corporation operates as a media and technology company worldwide. It operates through Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks segments. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues Net Income EPS Sector: Consumer Goods & Svcs Sub-Industry: Cable & Satellite Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY TARGET PRICE $ RETURN ON EQUITY (%) Ind Avg S&P 500 Q Q Q P/E COMPARISON Volume in Millions COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History RECOMMENDATION We rate () a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income EPS ANALYSIS¹ ($) Ind Avg S&P 500 HIGHLIGHTS 's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. Net operating cash flow has slightly increased to $4, million or 4.71% when compared to the same quarter last year. Despite an increase in cash flow, 's average is still marginally south of the industry average growth rate of 6.93%. Q Q Q Q Q Q Q NA = not available NM = not meaningful Q Q Q Q Compustat fiscal year convention is used for all fundamental data items. The debt-to-equity ratio is somewhat low, currently at 0.92, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a debt-to-equity ratio, the quick ratio of 0.49 is very and demonstrates a lack of ability to pay short-term obligations. Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. PAGE 1

2 PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) 1% 10% UNFAVORABLE 15% DISH CVC EBITDA Margin (TTM) CMCSK TWC SIRI CHTR FAVORABLE SJR LBTYA LBTYB LBTYK 50% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $6.9 Billion and. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) 1% 10% UNFAVORABLE LBTYK LBTYA LBTYB -4% CHTR Earnings Yield (TTM) SIRI TWC CVC FAVORABLE CMCSK DISH SJR 10% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between 1.6% and 9.1%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The $1 trillion global Media industry includes advertising, cable, film, newspapers, radio, and television. The Media business is dominated by household-name corporations such as Walt Disney (DIS), New York Times (NYT), and Time-Warner (TWX). However, several smaller, but rapidly growing players include Comcast (), DirecTV (DTV), and DISH Network (DISH). The industry is reliant on the economy and is one of the first sectors to thrive in a recovery and decline during a recession. Media companies naturally prosper during election years, thanks to substantial increases in advertising revenues -- the key metric of growth. This positive cyclical factor -- which is highlighted by an estimated $2 billion increase in both political and Olympic-related advertising -- is why overall growth forecasts for advertising continue to be positive. Those threats include potential legislation and court rulings on media merger concentrations within geographical regions, spliting up the royalty pie of DVD distribution fees with screenwriters, competing with cheaper cable advertising rates, and the rising popularity of zipping -- fast-forwarding through commercials by Digital Video Recorder (DVR) owners. Court fights and potential net neutrality legislation may pick winners and losers. Federal court rulings against the Federal Communications Commission (FCC) risk allowing broadband internet providers like Comcast charging higher prices to content providers and other websites to remain being received at top speed stifling new small business growth. Newspaper companies are desperate to see a rebound in corporate and classified advertising. However, the revenue streams from classified ads are being supplanted by internet ads and newspapers are attempting to sell online subscriptions to bolster declining print circulations. As for the film business, Hollywood continues to live or die based on the latest blockbuster releases. In a bullish trend, products, such as Apple s ipad and Google s Nexus, are giving consumers more ways to consume media. PEER GROUP: Media Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) , , , SJR SHAW COMMUNICATIONS INC , , CVC CABLEVISION SYS CORP , , TWC TIME WARNER CABLE INC , , , LBTYB LIBERTY GLOBAL PLC ,035 NM 18, , LBTYA LIBERTY GLOBAL PLC ,035 NM 18, , LBTYK LIBERTY GLOBAL PLC ,035 NM 18, , SIRI SIRIUS XM HOLDINGS INC , , CHTR CHARTER COMMUNICATIONS IN ,893 NM 9, CMCSK , , , DISH DISH NETWORK CORP , , , The peer group comparison is based on Major Cable & Satellite companies of comparable size. PAGE 2

3 COMPANY DESCRIPTION Comcast Corporation operates as a media and technology company worldwide. It operates through Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks segments. The Cable Communications segment offers video, high-speed Internet, and voice services to residential and business customers under the XFINITY brand name. This segment also provides business services, such as cellular backhaul services to mobile network operators; Ethernet network services; and online advertising services. The Cable Networks segment operates national cable networks, which provide entertainment, news and information, and sports content; regional sports and news networks; international channels; and cable television production operations, as well as owns digital media properties. The Broadcast Television segment operates NBC and Telemundo broadcast networks, NBC and Telemundo owned local broadcast television stations, and broadcast television production operations, as well as owns digital media properties. The Filmed Entertainment segment produces, acquires, markets, and distributes live-action and animated filmed entertainment under the Universal Pictures, Focus Features, and Illumination names. This segment also develops, produces, and licenses stage plays, as well as owns digital media properties. The Theme Parks segment operates theme parks; studios; Island of adventures; and a dining, retail, and entertainment complex. Comcast Corporation was founded in 1963 and is headquartered in Philadelphia, Pennsylvania. One Comcast Center Philadelphia, PA USA Phone: STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 4.5 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 80% of the stocks we rate. Total Return 4.5 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 80% of the companies we cover. Efficiency 4.0 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 70% of the companies we review. Price volatility 5.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 90% of the stocks we monitor. Solvency 5.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 90% of the companies we analyze. Income 3.5 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 60% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3

4 Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINANCIAL ANALYSIS 's gross profit margin for the third quarter of its fiscal year 2015 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. has very liquidity. Currently, the Quick Ratio is 0.49 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year Q4 FY E 2015(E) 7.41 E 2016(E) During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 2.96% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit INCOME STATEMENT Net Sales ($mil) 18, , EBITDA ($mil) 6, , EBIT ($mil) 4, , Net Income ($mil) 1, , BALANCE SHEET Cash & Equiv. ($mil) 2, , Total Assets ($mil) 158, , Total Debt ($mil) 47, , Equity ($mil) 51, , PROFITABILITY Gross Profit Margin 33.12% 34.43% EBITDA Margin 33.12% 34.42% Operating Margin 21.43% 22.76% Sales Turnover Return on Assets 5.10% 5.25% Return on Equity 15.69% 15.70% DEBT Current Ratio Debt/Capital Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) 2,457 2,576 Div / share EPS Book value / share Institutional Own % NA NA Avg Daily Volume 12,302,777 13,967,192 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4

5 RATINGS HISTORY Our rating for has not changed since 4/27/2010. As of 11/19/2015, the stock was trading at a price of which is 3.7% below its 52-week high of $64.99 and 25.2% above its 52-week low of $ Year Chart BUY: $ $65 $60 $55 $50 MOST RECENT RATINGS CHANGES Date Price Action From To 11/19/13 $47.46 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 11/19/2015) 39.61% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months % Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss % Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY Research Contact: Sales Contact: VALUATION BUY. This stock's P/E ratio indicates a discount compared to an average of for the Media industry and a discount compared to the S&P 500 average of To use another comparison, its price-to-book ratio of 2.98 indicates valuation on par with the S&P 500 average of 2.77 and a significant discount versus the industry average of The price-to-sales ratio is above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings Peers Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. is trading at a discount to its Price/Projected Earnings 8.46 Peers Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. Price/Book 2.98 Peers Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. Price/Sales 2.11 Peers 3.46 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. industry on this measurement. DISCLAIMER: Price/CashFlow 8.33 Peers Discount. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. Price to Earnings/Growth 0.19 Peers 0.93 Discount. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. trades at a significant discount to its Earnings Growth lower higher 0.31 Peers Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. is expected to have an earnings growth rate that significantly exceeds its Sales Growth lower higher 7.39 Peers 9.61 Lower. A sales growth rate that trails the industry implies that a company is losing market share. trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at PAGE 5