Mega-conglomerate Comcast has issues, but it’s hard to ignore the potential value up for grabs.
Comcast (NASDAQ: CMCSA) is frequently ranked as one of the most hated companies in America, but you might learn to love it in your portfolio.
Our AI Insights series has skewed heavily towards AI and tech companies but today’s pick is a bit of a throwback. Comcast began way back in 1963 as a modest cable company. It has since grown into a $100B company with a diverse portfolio of businesses including residential connectivity (Xfinity) , media (NBCUniversal) and even theme parks (Universal Studios).
Comcast, like other residential connectivity providers, also receives the wrath of every customer who experiences outages or poor service with its products. It’s also been a bit of a dud in terms of returns with plenty of negatives over the last few years.
All that said, there are some strong underlying factors in the business and it’s worth taking another look at the media/communications giant.
Let’s go!
ChatGPT Stock Pick of the Week: Comcast Corp. (CMCSA)
Here’s what ChatGPT had to say this week:
Buy Comcast Corp. (CMCSA) this week as a value pick. Comcast screens as one of the most undervalued names in the S&P 500 by trailing P/E, offering a rare combination of stable cash flows, entrenched assets, and a depressed multiple that positions it well for multiple expansion with medium risk tolerance.
Comcast (CMCSA) at a Glance
| Company | Comcast Corporation |
| Ticker (Exchange) | CMCSA (NASDAQ) |
| Founded | 1963 |
| Headquarters | Philadelphia, Pennsylvania, USA |
| CEO | Brian L. Roberts |
| Core business | Media and technology: broadband and wireless (Xfinity, Comcast Business), video, and voice, media, studios, and streaming (NBC, Telemundo, Universal, Peacock, Sky), theme parks (Universal Destinations & Experiences) |
| Market cap | $105 billion |
| Employees | 182,000 (2024) |
| Price to Earnings Ratio (P/E) | 4.73X |
Our Take
We’ve done a moderate amount of reporting on Comcast over the years but Senior News Writer Dave Kovaleski chimed in to give us a current take:
Comcast stock has been a laggard over the years. It has dropped 26% YTD and 34% over the past 12 months. Further, it has had an average annualized return of -8% over the past 5 years and -1% over the past 10 years. It has faced several headwinds over the years, from streaming and cord-cutting hurting its TV business to tons of competitors jockeying for market share in its broadband business.
It is looking to turn things around, spinning off its cable TV business and focusing on new growth areas, including streaming, mobile connectivity, and theme parks. It has been a rumored potential buyer for Warner Bros Discovery, most likely its streaming and movie business.
Comcast just turned in its third quarter earnings on October 30 and while it beat estimates, revenue was down 2.7% and net income was off 8.2% year-over-year. Earnings were down 3.4% and adjusted earnings were flat. The stock price was down about 2% on Thursday as investors were concerned about the loss of 104,000 broadband customers. However, those losses were offset by a gain of 414,000 mobile customers.
Dave went on to say that Comcast is dirt cheap right now with a P/E ratio of just 5 but reiterated that turnarounds take time. He also said that it will be particularly interesting to see if Comcast acquires a piece of Warner Bros Discovery in the near future. That’s definitely one to watch.
What Other Experts Are Saying About Comcast
Most analysts seem to agree that Comcast is currently undervalued. It’s rated as a moderate buy with an average target price of $40 over a 12-month period. You’ll find very few analysts ranking this one as a sell.
The Wall Street Journal recently noted that Comcast has been losing broadband subscribers but even the company has acknowledged falling demand in that area of the business.
Comcast is a fascinating business because it controls both the pipes (broadband) and the content pumping through them (NBCUniversal etc.). It can be challenging to gain a comprehensive understanding of the business when one side is performing poorly while the other is thriving.
How did last week’s pick perform?
Last week ChatGPT suggested purchasing $100 of data infrastructure company NetApp. It hasn’t been a great week for the enterprise-focused company as it’s down -4.13%.
There’s no overall narrative for why NetApp floundered this week. It does have an important earnings call coming up late next month, however, which might change its fortune.
It was the opposite story for the previous week’s pick, Micron Technology, which bounced 14% thanks to strong demand for AI infrastructure and several partnerships.
Overall, the ChatGPT portfolio is up 10% since its inception, outperforming our control portfolio (comprised solely of the S&P 500 aggregate VTI). The VTI-only portfolio is only up 2%.
Here’s how it looked before the inclusion of Comcast this week.
Methodology
Every week, we ask ChatGPT for a simple stock recommendation after the market closes on Wednesday.
We created some parameters for the recommendation, which you can read more about at the bottom of the first AI Insights article.
Disclaimer: Neither the large language models or ValueWalk suggest actually using this as an investment strategy. This article is for educational purposes only.
Here’s a look at our previous articles in the AI Insights series:
