Will Comcast Stock Deliver A Q3 Earnings Beat?

Comcast (NASDAQ:CMCSA)  is expected to report its Q3 2024 results in the coming weeks. We expect Comcast’s earnings to come in at $1.08 per share, marginally ahead of consensus estimates of $1.07 per share. We project that revenue will stand at about $31.7 billion, roughly in line with consensus estimates and up about 4% compared to last year. So what are some of the key trends that are likely to drive the company’s earnings? See our interactive dashboard analysis on Comcast Earnings Preview for more details on how Comcast’s revenues and earnings are likely to trend for the quarter.

Comcast’s bread-and-butter broadband Internet business has seen a lackluster performance in recent quarters. Over Q2 2024, Comcast lost about 120,000 domestic broadband customers.  The slowdown comes as the boom witnessed through the Covid-19 pandemic and the remote working and learning trend has eased with the housing market also slowing down.  Moreover, competition has been mounting from fixed wireless broadband players, who offer more flexibility and affordable rates. However, Comcast has been able to raise average pricing and this has helped overall profitability for the broadband business. These trends should continue to play out in Q3 as well.

Comcast’s cable TV business is also faring poorly, as the secular trend of cord-cutting continues. Over the last quarter, the company lost 419,000 video subscribers with customers increasingly opting for streaming services. The company’s fledgling wireless services operations – which operate on the Verizon network and use the Xfinity brand name – are likely to remain a bright spot for the company. Over Q2, the division saw wireless subscriber numbers rise 20% year-over-year to 7.2 million. The company’s content and experiences segment may face a somewhat mixed quarter, as demand in its theme parks business – a key growth driver in the aftermath of the Covid-19 pandemic – continues to soften. In Q2, theme park revenue declined by nearly 11% to $1.98 billion. Although this can be attributed in part to a lack of new attractions in Universal’s theme parks, the broader slowdown in post-lockdown travel is also likely to be a factor.

Comcast stock has been a weak performer since the start of the Covid-19 pandemic. The decrease in CMCSA stock over the last 4-year period has been far from consistent and has largely been as volatile as the S&P 500. Returns for the stock were -2% in 2021, -29% in 2022, and 29% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could CMCSA face a similar situation as it did in 2021 and 2022 and underperform the S&P over the next 12 months – or will it see a recovery?

At the current market price of roughly $41 per share, Comcast trades at under 10x consensus 2024 earnings. Although there remain near-term headwinds for the stock, Comcast has the potential to expand its earnings per share driven by share repurchases and margin expansion for the cable communication business via cost and efficiency improvements. We value Comcast stock at about $45 per share, about 10% ahead of the market price. See our analysis of Comcast Valuation for a closer look at what’s driving our price estimate for the company and how Comcast compares with its peers. Also, see our analysis of Comcast Revenue for more details on the company’s key revenue streams and how they have been trending.

While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

[1] Returns as of 10/10/2024
[2] Cumulative total returns since the end of 2016

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