Comcast Short
Comcast is an American cable company that has been losing a lot of subscribers recently. Last quarter, they said they were expecting the subscriber count on their streaming platform to decrease. I predict the same trend here with their cable services as well this quarter. This is mainly due to a price increase in their service. I assume the main reason why many customers decided to cancel their subscription was due to the high costs of living. Many other streaming platforms have also experienced the same thing such as Netflix. The reason why I believe their cable TV service will take a big hit was because with the rise of streaming platforms, most people already were canceling their subscriptions even before we entered a recession, however now, there are even more people canceling their service as it barely gets used and only charges their account. Considering the fact that streaming platform subscriptions are much more popular among people these days and it's already starting to have a negative customer count, I imagine their cable TV service being much worse this quarter. With the rising cost of electricity bills, many people have also stopped leaving their TV on while they aren’t using it, which causes a loss of viewership for Comcast. This report is also covering the summer period when people spend most of their time outdoors rather than staying home and watching TV. However, with all that in mind, I’m still having my doubts about a big customer fall in their cable TV sector. I imagine most people who have a subscription are middle aged parents or grandparents as compared to young adults who are still struggling with money. Most of the time, the only source of entertainment these people get are from the TV and by this point, they’ve probably already had their membership for years so the thought of canceling it won’t even come to their mind. On the other hand, Comcast has to deal with the high rise of electricity costs for their servers and other operational costs which heavily reduces their profit margins. Another problem that I have is the fact that they have a 100% EPS beating rate. Previously, I would have thought that it won’t matter much as this is the norm for the company and investors are used to it. However, that ended up being wrong as the company I had predicted to drop went up due to an EPS beat. Considering the environment we are in right now, it is much more rewarding than before to beat the estimates which I definitely predict with Comcast. Their EPS has also been seeing a lot of upwards revisisions lately which is a good sign but is still lower than what they had reported the last quarter. So what it really comes down to is whether they can give a good forecast or not. I find it unlikely for them especially in today’s environment however, it still isn’t impossible taking into account their long term customers.
Analyst’s comments:
Company's primary business segment of Broadband Internet may continue to witness a slowdown versus last year.
Q2 showed a downturn in price though revenue and earnings beat expectations, downfall was mainly due to losing broadband subscribers, the company saw a net loss of 10,000 residential subscribers.
Over the last 2 years, CMCSA has beaten EPS estimates 100% of the time and has beaten revenue estimates 100% of the time.
Over the last 3 months, EPS estimates have seen 4 upward revisions and 17 downward. Revenue estimates have seen 3 upward revisions and 17 downward.
Comcast beat on earnings in all the trailing four quarters, the average surprise being 9.99%.
Comcast’s top line in the to-be-reported quarter is expected to have witnessed a slowing broadband subscriber base due to the reversal of pandemic trends and increased competition from fixed wireless and fiber. Nevertheless, momentum in wireless is expected to have benefited its top-line growth.
Report time: Tomorrow before the market opens
Expected movement: -7%
P/E Ratio: 10.35
Market Cap: 139,325,934,867