TipRanks Smart Value #13: Media Mogul

Shrilekha Pethe on June 3, 2025

Dear Investors,

Welcome to the 13^th edition of our recently launched TipRanks Smart Value Newsletter!

This Week’s Top Value Pick: Comcast (CMCSA)

Comcast (CMCSA) is a U.S.-based global media and technology company delivering broadband, cable television, and telecommunications services. It operates through its core segments, including Xfinity, which provides high-speed internet, video, and voice services, and NBCUniversal, which encompasses broadcast, cable networks, streaming, film, and theme parks. Comcast’s advanced network infrastructure supports millions of customers, with innovations like Xfinity X1 and Peacock driving digital entertainment. Committed to both connectivity and content, Comcast invests in cutting-edge technologies and expansive media production.

Media Empire

Comcast’s journey began in 1963 when Ralph J. Roberts launched American Cable Systems in Tupelo, Mississippi. Renamed Comcast in 1969, the company grew rapidly through acquisitions, notably the $44.5 billion purchase of AT&T Broadband in 2002, which made it the largest U.S. cable operator with over 21 million subscribers. This move strengthened its broadband and voice offerings and set the stage for long-term growth.

Comcast’s ambition soared higher in 2011 when it acquired a 51% stake in NBCUniversal for $13.75 billion, completing full ownership in 2013 for $16.7 billion. This transformative merger brought NBC’s broadcast networks, Universal Pictures, and theme parks into its fold, diversifying revenue streams into media and entertainment. The launch of Peacock in 2020, fueled by NBCUniversal’s content, further boosted Comcast’s streaming revenue.

Comcast has strategically reshaped its portfolio over the past decade to enhance growth and competitiveness. In 2016, Comcast’s NBCUniversal acquired DreamWorks Animation for $3.8 billion, enhancing its family entertainment portfolio. The deal integrated DreamWorks’ successful franchises like “Shrek” and “How to Train Your Dragon” into Universal’s Filmed Entertainment Group, alongside Illumination Entertainment. It bolstered Comcast’s theme parks, TV programming, and consumer products, aiming to rival Disney.

Comcast’s $38.8 billion acquisition of Sky in 2018 marked a major international expansion, adding 23 million European subscribers and bringing Sky’s sports and news content under its umbrella. This boosted Comcast’s global earnings and diversified its media footprint. The company has also strengthened its enterprise services with strategic acquisitions: Masergy in 2021, enhancing its software-defined wide area networking (SD-WAN) and global networking capabilities, and Nitel in early 2025, expanding its managed services for business clients and adding to its high-margin connectivity segment.

In November 2024, Comcast announced plans to spin off Versant, a publicly traded company that will house legacy cable networks like USA Network, E!, CNBC, and digital assets like Fandango and Rotten Tomatoes. Representing slow-growth areas, these assets have weighed on Comcast’s revenue trajectory. The spin-off, expected by the end of this year, allows Comcast to focus on faster-growing businesses while giving Versant a clean slate to pursue digital growth.

Today, Comcast has annual revenues of around $124 billion, and with a market capitalization of nearly $131 billion, is ranked #33 on the Fortune 500 list.

Connectivity Core

Comcast operates a diversified business model anchored in both connectivity and media, with six key growth engines driving its performance: residential broadband, wireless, business services, theme parks, streaming, and premium studio content. In Q1 2025, these high-growth areas expanded at a mid-single-digit average rate, contributing over 60% of total revenue. This strong momentum is helping to offset slower or stagnant segments that make up the remaining 40% of the business. By balancing stable subscription services with dynamic media and entertainment offerings, Comcast is effectively navigating industry shifts while positioning itself for long-term growth.

Comcast’s Connectivity & Platforms business, its largest revenue driver, delivers broadband, wireless, video, and voice services across the U.S., U.K., and Italy. This segment is organized into two reporting lines: Residential Connectivity & Platforms and Business Services Connectivity. In the U.S., Comcast offers broadband through a gigabit-capable hybrid fiber-coaxial and fiber-to-the-premises network, while in the U.K. and Italy, services are delivered through third-party telecom infrastructure. Its footprint covers 64 million U.S. homes, with bundled broadband and wireless offerings enhancing customer experience.

In Q1 2025, Comcast’s domestic broadband revenue rose 1.7% to $6.56 billion, despite losing 199,000 subscribers due to heightened competition from fiber and fixed wireless providers. The gain was driven by a 3.3% increase in average revenue per user (ARPU), as Comcast earned more from existing customers. To address rising churn and pricing concerns, the company introduced a five-year broadband price lock, aiming to boost transparency and retention.

Meanwhile, its wireless services are provided through mobile virtual network operator (MVNO) agreements, primarily using Verizon’s network in the U.S., while offloading over 90% of wireless traffic to Comcast’s own extensive Wi-Fi hotspot network. This model enables Comcast to control costs and offer competitive pricing. As of Q1 2025, Comcast added 323,000 wireless lines, its best performance in two years, bringing its total to 8.1 million, which represents 13% penetration of its broadband base. Promotions like free unlimited lines and value-driven Bring Your Own Device (BYOD) plans support growth while keeping handset costs low. With a relatively small share of the $230 billion U.S. wireless market, Comcast has significant growth potential. Ongoing investments in Citizens Broadband Radio Service (CBRS) spectrum aim to cut MVNO costs further and strengthen its converged connectivity strategy.

Comcast’s pricing transparency and wireless promotions may temporarily pressure EBITDA, but management sees long-term gains. These efforts aim to boost customer loyalty, grow paid wireless lines, and strengthen pricing power, supporting more sustainable profitability over time.

The Business Services segment, approaching $10 billion in annual revenue with margins approaching 57%, offers broadband, voice, wireless, and select video services to enterprises. Growth is driven by small and medium-sized business adoption, expansion of enterprise connectivity solutions through acquisitions, like Masergy and Nitel, and demand for cybersecurity and advanced connectivity solutions. Comcast’s scale, multi-product strategy, and industry leadership make this a crucial growth pillar.

Entertainment Powerhouse

Comcast’s Content & Experiences business includes its media, studios, and theme parks operations. This segment creates and distributes entertainment, sports, and news globally while operating Universal theme parks in the U.S. and Asia. It is organized into three segments: Media, Studios, and Theme Parks.

The Media segment integrates NBCUniversal’s cable and broadcast channels, the Peacock streaming platform, and Sky Sports. Advertising and distribution are the main revenue drivers. This segment generates advertising revenue from distribution agreements, Sky ad sales, digital platforms, and third-party representation, while also offering marketing tools and data services to advertisers.

Peacock reached 41 million subscribers in Q1 2025, up from 34 million in the same period a year back, boosted by sports content like the NFL and NBA. Revenue grew 16% year-over-year to $1.2 billion, and EBITDA losses narrowed by $424 million to $215 million, reflecting improved efficiency and scale. Despite a 7% decline in domestic advertising revenue, due to election-year comparisons and timing of sports events, the business remains resilient, supported by strong 2025 upfront ad commitments.

Comcast’s Studios segment, led by NBCUniversal and Sky, generates revenue through theatrical releases, premium window sales, home entertainment, global licensing, and live stage productions. Recent success with both “Wicked” and “Nosferatu” has delivered record box office and streaming gains, boosting Peacock subscriptions and setting new standards for stage-to-screen adaptations. Upcoming titles like “How to Train Your Dragon” and “Jurassic World: Rebirth” are expected to sustain momentum, reinforcing Universal’s position as a top-tier content producer and advancing Comcast’s strategy of investing in high-return, franchise-driven entertainment.

Comcast’s Theme Parks segment, spanning Florida, California, Japan, and China, delivered $429 million in EBITDA in Q1 2025. While this represented a 32% year-over-year decline, the drop was primarily due to one-off pre-opening expenses of approximately $100 million tied to the upcoming Epic Universe Park, as well as a short-term dip in U.S. attendance, both seen as transitory. In 2024, the segment posted $3 billion in EBITDA, tripling over the past decade, underscoring the long-term trajectory. The launch of Epic Universe this May – the largest U.S. theme park expansion in decades – is poised to double the footprint of Universal Orlando and solidify its position as a multi-day destination. Early demand has been strong, driven by favorable guest sentiment and robust merchandise sales. Newly introduced family-focused attractions continue to broaden Universal’s audience appeal and heighten its competitive position vis-à-vis Disney. Even amid macroeconomic headwinds, attendance across international locations remains solid, and the strategic investment in Epic Universe positions Comcast to emerge stronger in the high-growth global theme park market. The company’s ongoing expansion – from Florida to future projects in Texas, Las Vegas, and the U.K. – highlights its confidence in theme parks as a cornerstone of long-term growth.

Looking ahead, Comcast’s diversified model, strategic investments in wireless infrastructure and international park expansion (including a planned U.K. theme park by 2031), and disciplined capital allocation support strong earnings and free cash flow.

Growth Momentum

Comcast has delivered solid financial performance over the past three years, underpinned by its diverse connectivity and media portfolio. Over the past three years, revenue grew at a CAGR of ~1%, while earnings per share (EPS) expanded at a much faster ~9.5%. This growth was driven by consistent strength in broadband and business services, rapid gains in wireless, the recovery and expansion of its theme parks, the success of blockbuster film releases, and the continued scaling of its Peacock streaming platform. Strategic acquisitions and disciplined cost control have further supported margins, while the company’s resilient, subscription-based model has provided earnings stability amid broader economic uncertainty.

In the first quarter, Comcast delivered better-than-expected financial results, with adjusted EPS and EBITDA both rising, despite a slight year-over-year revenue decline of 0.6% to $29.9 billion. Adjusted earnings per share rose 4.5% to $1.09, surpassing analyst estimates, while adjusted EBITDA increased 2% to $9.5 billion. The company returned $3.2 billion to shareholders during the quarter, underscoring its disciplined approach to capital allocation.

These strong results were fueled by continued momentum in wireless and streaming, solid monetization across broadband and business services, and healthy free cash flow generation. Together, these successes helped offset competitive pressures in Comcast’s legacy segments and reinforced its position for sustained profitability and long-term growth.

In the first quarter, Comcast’s Connectivity & Platforms segment delivered solid performance, with connectivity revenue rising 4.1% year-over-year to $11.3 billion. This growth was driven by gains across domestic broadband, wireless, international connectivity, and business services. Adjusted EBITDA for the segment increased 1.5% to $8.3 billion, and the adjusted EBITDA margin expanded by 90 basis points to 41.4% – or 80 basis points excluding the impact of foreign currency. Comcast continued executing its domestic network expansion strategy, adding 275,000 new home and business passings and expanding its converged broadband and wireless footprint.

Meanwhile, the Media segment saw a 21.5% increase in adjusted EBITDA to $1.0 billion, fueled by strong performance from Peacock, which continued to gain traction, with strong top-line growth supported by rising subscriber engagement and expanded content offerings. The platform significantly narrowed its losses compared to the prior year, reflecting improved operating leverage and disciplined cost management. This momentum highlights Peacock’s growing role as a key contributor within Comcast’s media strategy.

The Studios segment also posted strong results, with adjusted EBITDA up 22.3% to $298 million. This was fueled by carryover success from titles such as “Wicked” and “Nosferatu,” which have driven both box office and premium window revenues.

Looking ahead, Comcast’s outlook for earnings and free cash flow remains positive, supported by its balanced portfolio, continued investments in wireless and theme parks, and a focus on operational efficiency.

Dividend Dynamo

Comcast has demonstrated a long-standing commitment to shareholder value through consistent dividend growth and aggressive share repurchases. The company has increased its dividend annually for 16 consecutive years, with a 5-year compound annual growth rate of 8.24%. Its quarterly dividend stands at $0.33 per share, translating to $1.32 annually. Based on current prices, this results in a dividend yield of 3.65%, nearly double the Communications sector average.

Comcast’s dividend is well-supported by its strong free cash flow, which rose 19.4% year-over-year to $5.4 billion in Q1 2025, and its conservative payout ratio of 28.7% of adjusted earnings. FCF per share surged 26%, helping fund both shareholder returns and long-term investments across wireless, theme parks, and streaming.

This disciplined capital allocation framework has allowed Comcast to reinvest in high-growth areas like theme parks, while maintaining financial flexibility. At the same time, the company continues to reduce share count through an aggressive buyback program. In Q1 2025 alone, Comcast repurchased $2 billion worth of stock, part of the $3.2 billion returned to shareholders that quarter. Over the trailing twelve months, total capital returned is $13.1 billion. Since 2020, Comcast has returned nearly $60 billion to shareholders, reducing its outstanding shares by 5% and supporting adjusted EPS growth.

Despite its strong fundamentals, Comcast shares have declined more than 8% over the past year, reflecting headwinds in broadband and cable, intensifying competition, and rising costs. Still, analysts remain optimistic about the stock’s long-term potential. Most analysts’ forecasts anticipate an upside of more than 19%, with some predicting gains as high as 82%, driven by Comcast’s diversified portfolio, growth in wireless, and the launch of Epic Universe.

Valuation metrics further strengthen the investment case. Comcast trades at a non-GAAP price-to-earnings ratio of roughly 8x, representing a discount of about 35% to the Communications sector average. Compared to its peers in the Telecom & Broadband and Media & Entertainment industries, Comcast appears considerably undervalued. Its non-GAAP TTM and Forward P/E multiples, along with TTM and Forward EV/EBITDA, are the lowest among its peers, while its Price/FCF ratio comes in towards the bottom of the peer-group scale. Furthermore, discounted cash flow models estimate that CMCSA is undervalued by approximately 43%, indicating significant upside for long-term investors.

Investing Takeaway

Comcast offers a compelling investment story built on a diversified business model, consistent shareholder returns, and a focus on long-term growth. The company’s strong execution across connectivity, media, and theme parks, coupled with disciplined capital allocation and resilient cash flow, supports both reinvestment and shareholder returns. Despite recent share price pressure, its valuation appears attractive, especially given its expanding presence in wireless and streaming, as well as high-potential projects like Epic Universe. For investors seeking a stable yet growth-oriented opportunity, Comcast stands out as a well-rounded contender in the evolving media and telecom landscape.

Category: Smart Value