Cable web big Comcast (NASDAQ: CMCSA) inventory slipped 6% by means of 11:11 a.m. ET Thursday regardless of the corporate reporting higher than anticipated gross sales and earnings for the primary quarter of 2024.
Analysts had forecast the communications company would earn solely $0.99 per share (non-GAAP, or adjusted) on gross sales of $29.8 billion in Q1, however Comcast stunned to the upside with $1.04 per share in earnings and gross sales of $30.1 billion. But its inventory fell. Why?
Comcast’s Q1 earnings report
Comcast’s information wasn’t all good. Whereas the corporate beat expectations on each the highest and backside strains, income nonetheless solely grew about 1% 12 months over 12 months, and web earnings rose lower than 1%.
Nonetheless, by shopping for again shares (in order that what web earnings there was, was divvied up among fewer shares), Comcast managed to develop its earnings per share 6.5%, to $0.97 in accordance with typically accepted accounting rules (GAAP). What’s extra, Comcast’s free money movement for the quarter surged almost 20%, to $4.5 billion, which was higher than reported web earnings.
Additionally of curiosity: Comcast grew its broadband web income 4% — 4 occasions sooner than whole income development. And the corporate elevated its wi-fi buyer subscriber rely by 21%, to six.9 million subscribers.
Is Comcast inventory a purchase?
Nonetheless, the quantity that pursuits me most is Comcast’s free cash flow, which grew tremendously. At $16.8 billion, FCF now outstrips trailing web earnings by about 9%. And valued on these money income, Comcast inventory prices lower than 9x FCF. Contemplating that Comcast pays its shareholders a good 3.1% dividend yield, it should not take greater than about 6% annual development to make this inventory appear to be a cut price.
Because of inventory buybacks, Comcast truly simply grew EPS by 6.5% (and FCF almost 20%). Have been it not for the truth that Comcast carries $90 billion extra debt than money on its steadiness sheet, I would most likely be calling this inventory a purchase proper now. With the debt, I am much less positive — however proper now, and regardless of at present’s sell-off, I am nonetheless leaning towards the purchase camp on Comcast inventory.
Must you make investments $1,000 in Comcast proper now?
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Rich Smith has no place in any of the shares talked about. The Motley Idiot recommends Comcast. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
