VALUATION HIGHLIGHTS
- Connectivity & Platforms constitute 80% of the Trefis price estimate for Comcast's stock.
- Content & Experiences constitute 20% of the Trefis price estimate for Comcast's stock.
WHAT HAS CHANGED?
Q4 2024 Earnings
Comcast's Q4 2024 results were better than expected, with revenue standing at $31.92 billion and earnings coming in at $0.96 per share. However, the company reported larger-than-expected broadband subscriber losses of 139,000 residential customers, while it witnessed a stagnating paid subscriber base for its streaming service, Peacock.
Comcast's Wireless business is gaining traction
Comcast's Xfinity Mobile business, which relies on an MVNO (mobile virtual network operator) agreement with Verizon, has been gaining traction. Domestic Wireless customer lines stood at 7.8 million in Q4 2024. This wireless product has more room to grow, given that just a little over 10% of Comcast's base of residential broadband customers are presently subscribed to the offering.
BUSINESS SUMMARY
Comcast is a global media and technology company. Comcast is one of the largest providers of high-speed internet, video, and voice services in the United States. The company's media business includes NBCUniversal, which operates cable networks, broadcast television, filmed entertainment, and theme parks. Comcast's Sky business, based in Europe, operates video, high-speed internet, voice, and wireless phone services and also runs the Sky News broadcast network and Sky Sports networks.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Below are the key drivers of Comcast's value that present opportunities for upside or downside to the current Trefis price estimate for Comcast:
Connectivity & Platforms EBITDA Margin: Comcast's Connectivity division's EBITDA margins stood at 38.8% in 2021 and rose to 41.6% in 2024, driven by better cost management. Trefis expects the metric to remain roughly flat going forward. However, if Comcast is able to boost margins to around 45%, driven by higher-priced broadband plans and lower costs, there could be a 10% upside to our price estimate.
For additional details, select a driver above or select a division from the interactive Trefis split for Comcast at the top of the page.
SOURCES OF VALUE
We believe that Comcast's Cable Communications business is the biggest driver of its valuation for a couple of reasons.
High number of subscribers
Comcast had about 32 million broadband subscribers as of 2024. Going forward, we expect that broadband subscribers will continue to grow while the pay-TV subscriber base will shrink in the long term.
High average monthly fees per subscriber
There is quite a difference between fees per subscriber for Comcast's pay-TV and broadband subscribers. Comcast makes an average of over $110 per month from its pay-TV subscribers compared to levels of about $60 per month for broadband subscribers.
KEY TRENDS
Comcast takes streaming more seriously
With pay-TV services facing competition from online streaming companies such as Netflix, many cable TV users are cutting the cord. However, Comcast has been taking steps to cater to this growing market. The company's direct-to-consumer streaming service, Peacock, was launched in July 2020, offering both ad-supported and ad-free subscription options. The business has been gaining traction, with its subscriber base rising from around 9 million as of December 2021 to 34 million as of 2024.
Universal studio's focus on franchises
Comcast's Universal movie studio has been increasingly focusing on movie franchises, which have larger audiences and greater brand recognition, making them more likely to succeed than standalone films. Some popular franchises from the company include Fast and Furious and Despicable Me. Universal also successfully revived the fan-favorite Jurassic Park franchise.
NBCU is expanding in China with a massive theme park project in Beijing
NBCUniversal, along with Beijing Shouhuan Cultural Tourism Investment Co. (a consortium of four state-owned companies), opened a new Universal theme park in Beijing in September 2021. The park is spread over 300 acres and will eventually expand to 1,000 acres. The property also includes two hotels. China’s theme park industry is one of the largest in the world, with strong attendance levels. This should benefit NBCUniversal’s overall theme park business.
