Media Entertainment Stocks

Comcast Corp Valuation – January 2019 $CMCSA

Company Profile (excerpt from Reuters): Comcast Corporation, incorporated on December 7, 2001, is a media and technology company. The Company has two primary businesses: Comcast Cable and NBCUniversal. The Company’s Comcast Cable business operates in the Cable Communications segment. Its NBCUniversal business operates in four business segments: Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks (collectively, the NBCUniversal segments). Its other business interests consist primarily of Comcast Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center arena in Philadelphia, Pennsylvania and operates arena management-related businesses.

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMCSA – January 2019

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 EnterpriseMarket Cap > $2Bil$162,098,868,009Pass
 2. Sufficiently Strong Financial ConditionCurrent Ratio > 21.18Fail
 3. Earnings StabilityPositive EPS for 10 years prior Pass
 4. Dividend RecordDividend Payments for 10 years prior Pass
 5. Earnings GrowthIncrease of 33% in EPS in past 10 years using 3 year averages at beginning and end347.90%Pass
 6. Moderate PEmg RatioPEmg < 2012.76Pass
 7. Moderate Price to AssetsPB Ratio < 2.5 OR PB*PEmg < 502.27Pass
     
     
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.  
 1. Sufficiently Strong Financial ConditionCurrent Ratio > 1.51.18Fail
 2. Sufficiently Strong Financial ConditionDebt to NCA < 1.119.48Fail
 3. Earnings StabilityPositive EPS for 5 years prior Pass
 4. Dividend RecordCurrently Pays Dividend Pass
 5. Earnings GrowthEPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg$2.79
MG Growth Estimate15.00%
MG Value$107.49
OpinionUndervalued
MG GradeB
MG Value based on 3% Growth$40.48
MG Value based on 0% Growth$23.73
Market Implied Growth Rate2.13%
Current Price$35.63
% of Intrinsic Value33.15%

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 $2.79 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.13% 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 $29.05. The company pays a dividend of $0.63 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 12.76, which was below the industry average of 27.83, 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 $-22.75.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV)-$22.75
Graham Number$29.05
PEmg12.76
Current Ratio1.18
PB Ratio2.27
Current Dividend$0.63
Dividend Yield1.77%
Number of Consecutive Years of Dividend Growth10

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Most Recent Balance Sheet Figures

Balance Sheet Information9/1/2018
Total Current Assets$23,206,000,000
Total Current Liabilities$19,627,000,000
Long-Term Debt$69,711,000,000
Total Assets$200,635,000,000
Intangible Assets$122,094,000,000
Total Liabilities$128,290,000,000
Shares Outstanding (Diluted Average)4,619,000,000

Earnings Per Share History

EPS History 
Next Fiscal Year Estimate$2.54
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$2.79
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

10 Undervalued Companies for the Defensive Investor – June 2018
10 Low PE Stock Picks for the Defensive Investor – March 2018
5 Great Stocks This Week – 3/19/18
Comcast Corporation Valuation – March 2018 $CMCSA
Comcast Corporation Valuation – June 2016 $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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