Comcast Is Undervalued Yet With Blockbuster Results, So Get Plugged In

Not everybody loves Comcast the company, but the firm has enough customers to generate over $121 billion in revenues this year. CMCSA has a long record of growing all major business metrics at a good rate over time. The key factors of per share earnings and dividends each more than tripled over the past decade. Continuous shareholders performed acceptably, with 123.2% total returns, but that is just a fraction of the actual value created. That figure looked much more in line with reality almost exactly one year earlier when CMCSA carved out its all-time (split-adjusted) high of $61.80. That 43.8% one-year pullback has created a great chance to own a premier company at one of its lowest valuations ever. Comcast earned an A+ financial strength rating from Value Line and a top 1% percentile score for stock price stability. Earnings predictability is well above average as well. How cheap is CMCSA right now? What is a reasonable year-ahead price target for it? Let's go to the stats to determine those answers. Over the previous decade the shares typical fetched about 16.5-times earnings accompanied by around 1.85% in current yield. At its Sep. 6, 2022 quote of $34.72 CMCSA was offered at just 9.6-times this year's estimate while paying 3.11% while you wait for its next rebound. Previous best entry points (green-starred below) came with the shares at multiples ranging from 11.9-times to 16.3-times. Every one of the five showed above average yields, although none were as generous as today's is. Its two most obvious should have sold moments (red-starred) both occurred with the shares at higher than average valuations and sporting below typical yields. Just a partial reversion towards the mean multiple of 15 would justify an upturn to north of $58 by the end of 2023. That modest goal would deliver a very acceptable 73% or so over the coming 16-months. Yahoo Finance calls CMCSA undervalued. Its $47.78 12-month goal is listed as $47.78. That seems overly conservative to me as it implies just a 12.4-times price-to-earnings based on Yahoo Finance's own 2023 estimate. Even so, most of us would probably be satisfied if our entire portfolios grow by nearly 40% by this time next summer. Independent research house Morningstar is way more bullish on Comcast than that. It calls the stock a 5-star, best Buy. Morningstar does not provide year-ahead goals but does let us know what it feels each stock is worth right now. Morningstar calls present-day fair value for CMCSA as $60, implying at least 72% plus dividends in total return whenever the shares make it back to that level again. They also note the firm's wide moat that protects it from new entries into its primary businesses. Long-term prospects are equally appealing. Value Line thinks CMCSA will trade between $75 and $95 not later than 2027, and perhaps much earlier. Note that the total return projections below were calculated from a $36.29 starting price, rather than it now lower $34.72 price tag. If you agree that CMCSA is heading higher than shorting LEAP puts out to Jan. 19, 2024 might appeal to you. Actual pricing on CMCSA's $30 to $40 strike price puts, with the shares at $34.88, are shown below. Worst-case, forced purchase prices dropped to from $26.75 to $31.90 depending on the strike prices employed. Future stock market action can never be guaranteed. That said having downside protection running from 8.5% to 23.3% takes a lot of risk out of the equation, especially on a stock that appears undervalued to start. The three-year chart below shows that break-even points on the two more conservative strike prices would have been winning 100% of the time dating back to well before and right through the Covid-panic. The if exercised price on even the more aggressive $40 puts would have been profitable for all but a few weeks during the previous, tumultuous, three years. Note, too, that Comcast's EPS grew from $3.13 in 2019 to an estimated $3.60 this year. Annual dividends climbed by 29.8% over that time frame as well. Owning shares outright is the plain vanilla way to lock in substantial upside and a more than decent yield. Selling puts is just a side dish that could add some nice extra profits. Buy CMCSA shares, sell CMCSA puts or consider doing both.

Comcast Is Undervalued Yet With Blockbuster Results, So Get Plugged In

Everyone talks about cutting the cord, but Comcast generated over $121 billion in revenue in 2022. Investors should take note.

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