Comcast stock historically has not made big runs from breakouts. That’s not to say that CMCSA stock doesn’t have good years.
Comcast (CMCSA) stock rose 32% in 2019, trading mostly in line with the S&P 500. But in 2020, Comcast stock underperformed when compared with cable Charter Communications (CHTR) and Altice (ATUS). In 2021, CMCSA stock has advanced 17%.
Comcast and ViacomCBS (VIAC) on Aug. 18 announced the formation of a joint venture that will launch SkyShowtime, a new streaming service slated to roll out in over 20 European countries starting in 2022. The big question is whether the deal “portends a larger transaction (merger) between Comcast and ViacomCBS, despite clear regulatory hurdles,” said a RBC Capital report.
Shares in Comcast rose July 29 when it reported better-than-expected June-quarter earnings. For the first time, quarterly broadband revenue exceeded video. Comcast’s wireless business added a record 280,000 subscriber lines.
The biggest U.S. cable TV company, Comcast also owns media firm NBCUniversal and U.K.-based Sky. Comcast in May re-started a stock repurchase program.
It has about $9.5 billion remaining in a stock buyback authorization.
Comcast Stock: Peacock Streaming Service Growth
NBCU and the new Peacock-branded video streaming service were expected to get a boost from the Summer Olympics in Japan. But viewership disappointed amid coronavirus restrictions and advertisers were compensated, NBCU said.
The Peacock service signed up 12 million users in the second quarter, giving it 54 million overall. Of the 54 million, about 20 million were active monthly users.
Comcast’s high-speed internet services to homes and businesses remains its biggest growth driver, despite two big acquisitions.
The Peacock service should get a boost when it streams NBCU content that is currently available on Hulu, a joint venture with Walt Disney (DIS). Comcast owns a 33% stake in Hulu.
Disney is expected to buy out that stake by 2024 or sooner under an agreement. Analysts say the stake could be worth from $10 billion to $15 billion.
In July, NBC announced it is pulling its Universal Pictures films from AT&T‘s (T) HBO. It will make Peacock the online home for new releases after the movies play in theaters.
However, NBC’s Universal also announced a multi-year licensing deal with Amazon Prime. The deal could generate $2 billion in revenue, according to reports. Universal films will be exclusively available on Amazon.com‘s (AMZN) streaming service for four months after exiting theatres.
CMCSA Stock Fundamental Analysis
One issue is whether Roberts family-controlled Comcast stock will continue to make acquisitions.
Ralph Roberts co-founded Comcast in the 1960s. A dual-class stock structure gives the Roberts family control of about a third of the company’s voting power.
Since the days of cable industry pioneer John Malone at Tele-Communications Inc., free cash flow has been a key metric for cable TV companies. Comcast’s cable business churns out the lion’s share of free cash flow, even though it continues to lose video subscribers.
Consumers are switching to on-demand internet streaming services, but people still need internet services for video streaming. So growth in broadband services has been a bright spot. In addition, analysts expect upside for Comcast stock as it hikes prices for both video and broadband services in 2021.
Even before the coronavirus pandemic hit, NBCU struggled with ongoing changes in the entertainment business. Advertising continues to shift from broadcast TV to internet and mobile platforms.
Comcast restructured to consolidate its cable networks, broadcast networks and Peacock streaming service under one reporting unit.
In the June quarter, adjusted earnings rose 22% to 84 cents a share from a year earlier, topping estimates of 67 cents. Revenue climbed 20% to $28.5 billion.
Cable communications revenue increased 11% to $16.8 billion, the company said. NBCUniversal revenue popped 39% to $8 billion as advertising, theme parks and box office sales rebounded.
Comcast said it added 354,000 broadband customers, topping expectations of 270,000. Comcast lost 399,000 video subscribers versus 477,000 in the year-earlier period.
About 6% of broadband customers now also buy wireless phone services. Comcast aims to curb customer turnover by packaging broadband and wireless services.
Beijing Theme Park Key For NBCUniversal
One big question is how soon theme parks can return to profitability while operating at lower capacity with fewer visitors.
Comcast opened its $580 million Super Nintendo World attraction in Japan in early February. A Universal Studios theme park in Beijing is expected to open in 2021.
Comcast Stock Technical Analysis
In addition, CMCSA stock holds an Accumulation/Distribution Rating of B. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. On an A+ to E scale, the rating measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Satellite TV broadcaster Sky remains a “show-me” risk for investors amid broadband investments and equipment upgrades.
From a technical view, the company keeps forming bases on top of or next to one another, and has yet to make a sustained run.
Is Comcast Stock A Buy Now?
As of Sept. 2, CMCSA stock trades in a buy zone just above a flat base entry point of 59.80.
Some technical ratings could be better. Investors might consider putting money into an S&P index fund or an ETF. The latter two options have more moneymaking potential without posing the risk of investing in a single stock.
What makes CMCSA stock different from cable industry peers is ownership of media and entertainment firm NBCUniversal and U.K.-based Sky. Investors playing the cable space may prefer less diversified pure plays such as Charter or Altice.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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