2024-02-14 08:38:29 ET
Summary
- With a profitability grade of A+ and rated as a Strong Buy, Comcast seems attractive as an investment.
- However, its underperformance relative to the S&P 500 Communications services sector indicates that investors seem to have some reserve about the company's prospects.
- The problem is wireless subscriber numbers not growing fast enough to offset the losses in cable, in turn leading to revenue stagnation.
- The solution most probably calls for more capital expenditure which would in turn impact free cash flow and profits.
- Worse, for a company with a high debt load, spending more money could see an impact on the amount of capital returned to shareholders.
Comcast ( CMCSA ) enjoys a profitability grade of A+ with a free cash flow margin dwarfing the median for the Communications services sector by over 140% . Its stock has been rated as a Strong Buy by Quant. However, trading at less than $42, it has delivered gains of only 7% in the last year while the S&P 500 Communications Services Sector is up by more than 49%....
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Comcast: Attractive FCF Margins, But Has A Growth Problem