Comcast (CMCSA) Surprises with Q4 Sales, Beating Expectations

Financial Highlights for Q4 2024:

* Revenue: $31.92 billion (2.1% YoY growth, 1% above estimates)
* Adjusted EPS: $0.96 (11.4% above estimates)
* Adjusted EBITDA: $8.81 billion (3.2% above estimates, 27.6% margin)
* Operating Margin: 15.6%, up from 14.3% in Q4 2023
* Free Cash Flow Margin: 10.2%, up from 5.5% in Q4 2023
* Domestic Broadband Customers: 31.84 million (down 411,000 YoY)
* Domestic Video Customers: 12.52 million (down 1.58 million YoY, slight beat)

Company Overview:

Comcast Corporation (NASDAQ: CMCSA), a multinational telecommunications provider, offers a range of services including wireless, cable, and satellite connections.

Growth Analysis:

Over the past five years, Comcast has posted weak sales growth of 2.6% CAGR. Recent revenue performance has slowed, with flat growth over the last two years.

Industry Trends:

The shift from landlines and cable to wireless and streaming services poses challenges for telecommunications companies. However, increased demand for cell phone plans and high-speed internet presents growth opportunities.

Financial Strength:

Comcast maintains a decent free cash flow margin of 10.4% over the last two years. In Q4 2024, its free cash flow margin improved to 10.2%, a positive sign.

Analyst Expectations:

Analysts expect Comcast's revenue to remain flat over the next 12 months, indicating potential demand headwinds. However, its cash conversion is projected to improve, increasing its flexibility.

Investment Thesis:

While Comcast's Q4 earnings beat estimates and its financial position is stable, ongoing declines in broadband and video customers raise concerns. Investors should consider Comcast's long-term business quality and valuation before making any investment decisions.