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Comcast Corporation Valuation – March 2018 $CMCSA

Company Profile (obtained from Marketwatch): Comcast Corp. is a media, entertainment, and communications company, which engages in the provision of video, Internet, and phone services. It operates through the following segments: Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks. The Cable Communications segment provides services to business customers and sell advertising. The Cable Networks segment consists of national cable networks, regional sports, news networks, international cable networks, and cable television studio production operations. The Broadcast Television segment includes NBC and Telemundo broadcast networks. The Filmed Entertainment segment involves in the management of Universal Pictures and DreamWorks Animation. The Theme Parks segment comprises of Universal theme parks in Orlando, Florida, and Hollywood, California and Universal Studios theme park in Osaka, Japan. The company was founded by Ralph J. Roberts in 1963 and is headquartered in Philadelphia, PA.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CMCSA – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $169,199,412,411 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.74 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 329.14% Pass
6. Moderate PEmg Ratio PEmg < 20 13.67 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.51 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.74 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.80 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.67
MG Growth Estimate 15.00%
MG Value $102.62
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $38.65
MG Value based on 0% Growth $22.66
Market Implied Growth Rate 2.58%
Current Price $36.43
% of Intrinsic Value 35.50%

Comcast Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.25 in 2014 to an estimated $2.67 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.58% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Comcast Corporation revealed the company was trading above its Graham Number of $26.79. The company pays a dividend of $0.63 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 13.67, which was below the industry average of 35.9, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-21.64.

Comcast Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.64
Graham Number $26.79
PEmg 13.67
Current Ratio 0.74
PB Ratio 2.51
Current Dividend $0.63
Dividend Yield 1.73%
Number of Consecutive Years of Dividend Growth 10

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $16,060,000,000
Total Current Liabilities $21,561,000,000
Long-Term Debt $59,422,000,000
Total Assets $186,949,000,000
Intangible Assets $114,923,000,000
Total Liabilities $118,343,000,000
Shares Outstanding (Diluted Average) 4,726,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.16
Dec2017 $4.75
Dec2016 $1.78
Dec2015 $1.62
Dec2014 $1.60
Dec2013 $1.28
Dec2012 $1.14
Dec2011 $0.75
Dec2010 $0.65
Dec2009 $0.63
Dec2008 $0.43
Dec2007 $0.42
Dec2006 $0.40
Dec2005 $0.09
Dec2004 $0.15
Dec2003 $0.48
Dec2002 -$0.06
Dec2001 $0.21
Dec2000 $0.71
Dec1999 $0.44
Dec1998 $0.40

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.67
Dec2017 $2.68
Dec2016 $1.59
Dec2015 $1.42
Dec2014 $1.25
Dec2013 $1.01
Dec2012 $0.82
Dec2011 $0.63
Dec2010 $0.55
Dec2009 $0.47
Dec2008 $0.36
Dec2007 $0.31
Dec2006 $0.25
Dec2005 $0.17
Dec2004 $0.24
Dec2003 $0.31
Dec2002 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Comcast Corporation Valuation – June 2016 $CMCSA
58 Companies in the Spotlight This Week – 1/31/15
Comcast Corporation Annual Valuation – 2015 $CMCSA
14 Companies in the Spotlight This Week – 1/18/14
ModernGraham Valuation: Comcast Corporation (CMCSA)

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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