Comcast Stock: Is the Glass Half Full or Empty After Q2 Results?

Global media and broadband giant Comcast Co. (NASDAQ: CMCSA) stock is underperforming the S&P 500, trading down 9.4% year-to-date (YTD) versus the index, up 14.54%. Its Q2 2024 earnings results did nothing to break it out of its 4-month trading range. Its shares initially sold off on the report but rebounded shortly afterward. Comcast has a vast portfolio of diversified businesses that most investors may not be aware of. Value hunters may find the stock is a bargain, trading at just 8.75x forward earnings and paying a 6.64% annual dividend yield.

Comcast operates in the consumer discretionary sector, competing with media giants like The Walt Disney Co. (NYSE: DIS), Warner Bros. Discovery Inc. (NASDAQ: WBD), and broadband provider Verizon Communications Inc. (NYSE: VZ).

Comcast is a Diversified Media and Technology Behemoth

Originally known as the nation’s largest cable TV company, Comcast has evolved and transformed into a media giant through acquisitions. The company continues to offer cable TV, mobile phones, high-speed internet, and home phone services through its Xfinity division. Comcast Business provides telecommunications and broadband services to businesses. Its media network is NBCUniversal, which owns the NBC network. It owns cable networks, including CNBC, USA Network, Syfy, Bravo, E!, Oxygen, Telemundo, TeleXitos, and Cozi TV. It owns movie and television production companies Universal Picture, Universal Television, and Focus Features. Its streaming network is Peacock. It owns Universal Destinations & Experiences theme parks located in Hollywood, Orlando, Japan, and Singapore.

Comcast Also Owns Sports Teams

Its sports and stadium subsidiary is Comcast Spectator, which is a partnership between Comcast and Ed Snider. It owns and operates the Wells Fargo Center in Philadelphia, Pennsylvania. It owns sports teams, including the Philadelphia 76ers NBA basketball team, The Philadelphia Flyers NHL hockey team, the Philadelphia Wins NLL lacrosse team, the Philadelphia Fusion Overwatch League team, and the Maine Mariners East Coast Hockey League (ECHL) team. Comcast Spectator owns a strategic interest in Spectra, Learfield, and XFINITY Live! Philadelphia and N3rd Street Gamers.

CMCSA Stock Continues to Chop Around in a Rectangle Channel

The daily candlestick chart for CMCSA illustrates a rectangle trading channel pattern. This pattern is comprised of parallel flat upper and lower trendlines at $41.20 and $37.15, respectively. The channel commenced on April 23, 2024, and has continued to contain the stock in the range ever since. Even the Q2 2024 earnings report couldn’t break CMCSA out of the channel as it briefly touched the lower trendline support at $37.15 and coiled back up to $40.09. The daily relative strength index (RSI) has bounced to the 57-band as it may attempt to retest the 70-band and upper trendline resistance. Pullback support levels are at $37.15, $35.59, $33.78, and $32.16.

Headline Results Look Strong But Reveal Weakness Under the Hood

Harley-Davidson reported Q2 EPS of $1.63, beating consensus estimates by 23 cents. Revenues rose 12% YoY to $1.62 billion, beating $1.29 billion consensus analyst estimates. North American retail performance was down 1%, but sales of its more expensive Touring and CVO motorcycles surged 12% YoY, causing the EPS beat. HDMC's revenues climbed 13%, driven by its 16% global shipment increase. HDFS operating income rose 21%, and revenue grew 10% YoY.

The company had heavy promotions and incentives to clear out inventory, leaving buyers exhausted and demand soft for its 2024 models. Motorcycle sales rose 20%, but parts & accessories sales fell 10%, and apparel sales fell 4% YoY. As a result of the heavy promotions, the gross margin fell 270 bps to 32.1%. Its Touring market share rose 5.3% to 75% in the first half of 2024.

Comcast reported Q2 2024 EPS of $1.21, beating consensus estimates by 9 cents. Adjusted EPS rose 7% YoY. Revenues fell 2.7% YoY to $29.69 billion, falling short of $30.02 billion. In the quarter, Comcast paid out $1.2 billion in dividends and completed $2.2 billion in stock buybacks.

Growth Can Be Found Under the Hood

Comcast progressed on its domestic network expansion and upgrade strategy by expanding the deployment of mid-split technology to 42% of its footprint. Comcast added 302,000 new homes and businesses passed in Q2. The domestic broadband average rate per customer rose 3.6%, driving domestic broadband revenue growth by 3% to $6.6 billion. Domestic wireless customer lines rose 20% YoY to 7.2 million, including 322,000 net additions in the quarter. Business services connectivity adjusted EBITDA rose 4.4% to $1.4 billion, and adjusted EBITDA margin was 57%. Peacock streaming service subscribers rose 38% YoY to 33 million, driving up revenues by 28% to $1 billion.

Comcast CEO Brian Roberts commented, “Broadband ARPU increased by 3.6%, and we delivered 6% revenue growth in our connectivity businesses while expanding our Adjusted EBITDA margin across Connectivity & Platforms to a record-high 41.9%. Media returned to Adjusted EBITDA growth, driven by Peacock, which delivered the best year-over-year improvement for any quarter since its launch in 2020.”

Comcast analyst ratings and price targets are at MarketBeat. There are 22 analyst ratings on CMCSA stock, comprised of 11 Buys, 10 Holds, and one Sell. The ratings have an 18.3% upside to the consensus average price target of $46.96.