Comcast: a cheap stock with steady flows, but before restructuring?
Comcast $CMCSA2.1% is one of the cheapest-valued stocks in the S&P 500, even though it generates steady cash flows. The main problem is stagnation in the broadband segment and growing pressure to break up the company.
1. Extremely low valuation
-Shares of $CMCSA2.1% are trading at just eight times earnings, lower than the competition.
- The 3.6% dividend is attractive to dividend investors.
2. Growth problems in broadband
- Loss of 139,000 subscribers in Q4 2024.
- Increasing competition from AT&T and mobile operators with fixed wireless services.
3. Peacock streaming service remains loss-making
- Cumulative loss of $9 billion since launch.
- With 36 million subscribers, it is far behind Netflix (300+ million).
4. Universal's undervalued parks may be a hidden trump card
- A new Epic Universe park in Orlando (2025) could significantly boost revenue.
- Analysts estimate that the value of the parks could reach up to $40 billion.
5. Pressure to break up the company
- Analysts suggest splitting into three separate entities (broadband, NBCUniversal/Sky, cable networks).
- CEO Brian Roberts opposes the changes, but investors are pushing to unlock hidden value.
6. Speculation of a merger with Charter Communications
- A merger with the second-largest cable Internet provider in the U.S. could strengthen its market position.
- Antitrust risk, but perhaps a necessity due to competition.
Why invest?
- A cheap stock with an attractive dividend.
- Possible value upside in restructuring or merger.
- Undervalued segments (Universal, Sky, NBCUniversal parks).
What to watch out for?
- Stagnation in the key broadband segment.
- Loss-making Peacock with an uncertain future.
- Pressure to change management, but Roberts is in control.
➡ Comcast is currently a value bet with options to grow. Key question: Will there be a restructuring or will the company $CMCSA2.1% will stick with its current model?
I'd rather invest in $T1.9%, but I still don't find this sector very interesting and don't invest in these companies.
The dividend is fine and the stock is very undervalued, but the stagnation in the core segment could be a pretty big problem.