Comcast Corporation (CMCSA) Bundle
Understanding Comcast Corporation (CMCSA) Revenue Streams
Understanding Comcast Corporation’s Revenue Streams
The revenue streams of the company are diverse, encompassing various products and services across multiple regions. The primary sources of revenue include:
- Residential Connectivity & Platforms
- Business Services Connectivity
- Media
- Studios
- Theme Parks
Revenue Breakdown by Segment
As of September 30, 2024, the revenue from external customers by segment is detailed in the following table:
| Segment | Revenue (in millions) |
|---|---|
| Residential Connectivity & Platforms | $17,866 |
| Business Services Connectivity | $2,425 |
| Media | $8,231 |
| Studios | $2,826 |
| Theme Parks | $2,289 |
| Total Revenue | $33,637 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates for the three and nine months ended September 30, 2024, compared to 2023, are as follows:
| Period | Revenue (in millions) | Growth Rate |
|---|---|---|
| Three Months Ended September 30 | $33,637 | 6.1% |
| Nine Months Ended September 30 | $91,817 | 1.7% |
Contribution of Business Segments to Overall Revenue
The contribution of different business segments to overall revenue for the nine months ended September 30, 2024, is detailed below:
| Segment | Revenue Contribution (%) |
|---|---|
| Residential Connectivity & Platforms | 58.2% |
| Business Services Connectivity | 7.9% |
| Media | 22.8% |
| Studios | 8.5% |
| Theme Parks | 6.8% |
Analysis of Significant Changes in Revenue Streams
In 2024, significant changes in revenue streams include:
- Media Segment: Revenue increased by 36.5% for the third quarter, largely attributed to the Paris Olympics, contributing $1.9 billion to the total revenue.
- Advertising Revenue: Increased by 74.9% for the three months ended September 30, 2024, reflecting a rise in domestic political advertising.
- Video Revenue: Decreased by 6.2% due to a decline in video subscribers.
Overall, the company’s revenue streams reflect a combination of growth in certain segments, such as Media and Advertising, while facing challenges in traditional areas like Video.
A Deep Dive into Comcast Corporation (CMCSA) Profitability
Profitability Metrics
In this section, we will analyze the profitability metrics of the company, focusing on gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
As of September 30, 2024, the company's financial performance showed the following profitability metrics:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $6,904 million | $6,886 million | 0.3% |
| Operating Profit | $5,859 million | $6,475 million | (9.5%) |
| Net Profit | $3,629 million | $4,046 million | (10.3%) |
| Net Profit Margin | 11.3% | 12.1% | (0.8%) |
Trends in Profitability Over Time
Comparing the financial results for the nine months ended September 30, 2024, with the same period in 2023, we observe the following trends:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $91,817 million | $90,319 million | 1.7% |
| Operating Income | $18,304 million | $18,830 million | (2.8%) |
| Net Income | $11,415 million | $12,128 million | (5.9%) |
Comparison of Profitability Ratios with Industry Averages
In comparison with industry averages, the company's profitability ratios are as follows:
| Metric | Company Ratio | Industry Average | Difference |
|---|---|---|---|
| Gross Margin | 38.7% | 40.5% | (1.8%) |
| Operating Margin | 17.9% | 19.2% | (1.3%) |
| Net Margin | 11.3% | 12.8% | (1.5%) |
Analysis of Operational Efficiency
Examining operational efficiency, we note the following:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Cost of Goods Sold (COGS) | $10,962 million | $11,065 million | (0.9%) |
| Total Costs and Expenses | $26,211 million | $23,640 million | 10.9% |
| Adjusted EBITDA | $9,735 million | $9,962 million | (2.3%) |
Debt vs. Equity: How Comcast Corporation (CMCSA) Finances Its Growth
Debt vs. Equity: How Comcast Corporation Finances Its Growth
As of September 30, 2024, Comcast Corporation's total debt stood at $101.4 billion, with a carrying value reflecting an estimated fair value of $96.8 billion. This marks an increase from a total debt of $97.1 billion as of December 31, 2023, which had an estimated fair value of $92.2 billion.
The company’s debt structure includes both short-term and long-term components. Notably, the long-term debt includes various senior notes with varying maturities and interest rates. Recent issuances include €1.8 billion in fixed-rate euro senior notes maturing in 2032 and 2036, effectively converted to $2.0 billion in U.S. dollars at a weighted-average interest rate of 4.72%. Additionally, £750 million ($1.0 billion) in sterling senior notes maturing in 2040 was issued at an interest rate of 5.25%.
The debt-to-equity ratio is a critical measure of financial health. As of September 30, 2024, the debt-to-equity ratio for Comcast was approximately 2.43, calculated as total debt divided by total equity of approximately $41.7 billion. This ratio is above the industry average of 1.5, indicating a higher reliance on debt financing compared to peers.
| Debt Type | Amount (in billions) | Maturity | Interest Rate |
|---|---|---|---|
| Fixed-rate euro senior notes | 2.0 | 2032, 2036 | 4.72% |
| Fixed-rate sterling senior notes | 1.0 | 2040 | 5.25% |
| Senior notes (various) | 3.3 | 2029 - 2054 | 5.38% |
In May 2024, the company established a new $11.8 billion revolving credit facility due in May 2029, with options to extend the expiration date to May 2031, subject to lender approval. This facility is designed for general corporate purposes and provides liquidity benefits to the company.
Comcast’s recent refinancing activities include the early redemption of $725 million of outstanding notes due in 2025. The company made total debt repayments of $2.4 billion during the nine months ended September 30, 2024, including significant repayments of various senior notes.
To balance its capital structure, Comcast has engaged in share repurchase programs, repurchasing 162 million shares for $6.6 billion in the nine months ended September 30, 2024. The Board of Directors approved a new share repurchase authorization of $15.0 billion in January 2024, with $9.0 billion remaining as of September 30, 2024.
Overall, the company's strategy indicates a preference for debt financing to fuel its growth while managing equity through share repurchases. This approach enhances shareholder value but also increases financial risk due to higher leverage.
Assessing Comcast Corporation (CMCSA) Liquidity
Assessing Comcast Corporation's Liquidity
Current Ratio: The current ratio for Comcast Corporation as of September 30, 2024, was 0.86. This indicates that for every dollar of current liabilities, the company had $0.86 in current assets.
Quick Ratio: The quick ratio was reported at 0.65, highlighting that the company has $0.65 of liquid assets for every dollar of current liabilities, excluding inventory from current assets.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital was calculated as:
- Current Assets: $18.4 billion
- Current Liabilities: $21.4 billion
- Working Capital: -$3.0 billion
This negative working capital indicates potential liquidity concerns, suggesting that the company may face challenges in covering its short-term obligations.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, show:
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $19,593 | $22,579 |
| Net Cash Used in Investing Activities | ($10,600) | ($11,700) |
| Net Cash Used in Financing Activities | ($6,500) | ($9,100) |
The decrease in net cash provided by operating activities from 2023 to 2024 indicates a reduction in cash inflows from core operations. Meanwhile, cash used in investing and financing activities also decreased, which may reflect strategic shifts in capital allocation.
Potential Liquidity Concerns or Strengths
As of September 30, 2024:
- Cash and Cash Equivalents: $8.8 billion
- Total Debt: $101.4 billion
- Available under Revolving Credit Facility: $11.8 billion
The company maintains a significant amount of cash and cash equivalents, along with substantial availability under its revolving credit facility, which can provide a buffer against short-term liquidity pressures. However, the high level of debt relative to cash reserves and current liabilities poses a challenge for managing liquidity effectively.
In conclusion, while the company has some liquidity strengths, the negative working capital and the high debt levels indicate areas that require careful monitoring by investors.
Is Comcast Corporation (CMCSA) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will examine key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical measure for assessing valuation. As of the latest report, the trailing twelve months (TTM) P/E ratio stands at 32.1.
Price-to-Book (P/B) Ratio
The P/B ratio, another significant indicator, is currently reported at 1.8.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 12.5, suggesting how the market values the company in relation to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated as follows:
| Month | Stock Price (USD) |
|---|---|
| October 2023 | 38.25 |
| November 2023 | 40.50 |
| December 2023 | 39.75 |
| January 2024 | 41.00 |
| February 2024 | 39.00 |
| March 2024 | 37.50 |
| April 2024 | 38.00 |
| May 2024 | 39.50 |
| June 2024 | 40.25 |
| July 2024 | 42.00 |
| August 2024 | 40.75 |
| September 2024 | 39.80 |
Dividend Yield and Payout Ratios
The current dividend yield is 3.1%, with an annualized dividend of $1.24 per share. The payout ratio is approximately 41.5% based on the earnings per share of $2.92.
Analyst Consensus on Stock Valuation
Analyst ratings reflect a consensus of Hold, with a target price averaging around $40.00 per share, indicating a cautious outlook on the stock's short-term performance.
Key Risks Facing Comcast Corporation (CMCSA)
Key Risks Facing Comcast Corporation
Comcast Corporation faces a variety of internal and external risks that could significantly impact its financial health. Understanding these risks is crucial for investors.
Industry Competition
The telecommunications and media industries are characterized by intense competition from both traditional cable providers and emerging streaming services. As of September 30, 2024, the company reported a decline in video revenue to $6.713 billion from $7.154 billion year-over-year, reflecting a 6.2% decrease . This decline is attributed to a loss of video customers amid increasing competition.
Regulatory Changes
Regulatory scrutiny in the telecommunications sector poses a significant risk. Changes in policies regarding net neutrality, data privacy, and market competition could adversely affect operational capabilities and financial performance. For instance, the expiration of the Affordable Connectivity Program in Q2 2024 led to an estimated net loss of 96,000 residential broadband customers in Q3 2024 .
Market Conditions
Fluctuations in market conditions can also impact revenue streams. The company reported total revenue of $32.070 billion for the three months ended September 30, 2024, a slight increase from $30.115 billion in the same period of 2023 . However, the underlying growth remains fragile due to economic pressures affecting consumer spending.
Operational Risks
Operational risks include challenges in managing costs effectively. Total costs and expenses increased to $26.211 billion from $23.640 billion year-over-year, a 10.9% increase . This rise is primarily driven by higher programming and production costs, particularly those associated with major events like the Paris Olympics.
Financial Risks
The company's debt levels also present financial risks. As of September 30, 2024, total debt stood at $101.4 billion, up from $97.1 billion at the end of 2023 . Increased borrowing costs could pressure profitability as interest rates rise, with interest expense recorded at $1.037 billion for the three months ending September 30, 2024 .
Strategic Risks
Strategically, the company is under pressure to adapt to changing consumer preferences, particularly with the shift towards streaming services. The total revenue from the Media segment increased to $8.231 billion for Q3 2024, reflecting a 36.5% increase year-over-year, but this was significantly influenced by the Olympics . Without such events, maintaining growth in this segment could be challenging.
Mitigation Strategies
To address these risks, the company has implemented various strategies. For example, in May 2024, Comcast established a new $11.8 billion revolving credit facility to enhance liquidity . Additionally, the company is focusing on expanding its streaming services to capture a larger share of the market and offset declines in traditional cable subscriptions.
| Risk Factor | Current Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Video revenue decrease to $6.713 billion (-6.2%) | Expand streaming services |
| Regulatory Changes | Loss of 96,000 broadband customers | Ongoing regulatory compliance initiatives |
| Market Conditions | Total revenue of $32.070 billion (slight growth) | Cost management and efficiency improvements |
| Operational Risks | Total costs increased to $26.211 billion (+10.9%) | Focus on operational efficiency |
| Financial Risks | Total debt of $101.4 billion | New credit facility for liquidity |
| Strategic Risks | Media segment revenue influenced by Olympics | Diversification of content offerings |
Future Growth Prospects for Comcast Corporation (CMCSA)
Future Growth Prospects for Comcast Corporation
Analysis of Key Growth Drivers
The company is focusing on several growth drivers, including product innovations and market expansions. For the three months ended September 30, 2024, total revenue was $8,231 million, a 36.5% increase from $6,029 million in the same period of 2023. Major contributors include revenue from the media segment, which saw a significant boost from the Paris Olympics.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections are optimistic, with estimates suggesting an increase in total revenue for the full year 2024 to approximately $91,817 million, up from $90,319 million in 2023. Adjusted EBITDA is expected to remain stable at around $30,774 million for 2024.
Strategic Initiatives and Partnerships
Strategic initiatives include expanding the customer base for the Peacock streaming service, which had 36 million paid subscribers as of September 30, 2024, up from 28 million a year earlier. Collaborations for content licensing and distribution are also pivotal for growth.
Competitive Advantages
The company maintains competitive advantages through its extensive infrastructure and brand recognition. The domestic broadband segment reported revenue of $6,539 million for the three months ended September 30, 2024, reflecting a 2.7% increase year-over-year. This growth is supported by higher average rates and an expanding customer base in wireless services.
| Segment | Revenue (Q3 2024) | Revenue (Q3 2023) | Change (%) |
|---|---|---|---|
| Media | $8,231 million | $6,029 million | 36.5% |
| Residential Connectivity | $8,869 million | $8,393 million | 5.7% |
| Business Services Connectivity | $2,425 million | $2,320 million | 4.5% |
| International Connectivity | $1,236 million | $1,109 million | 11.4% |
Overall, the company's focus on expanding its high-margin businesses, including connectivity and streaming services, positions it well for future growth despite challenges in video and other traditional segments.
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Article updated on 8 Nov 2024
Resources:
- Comcast Corporation (CMCSA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Comcast Corporation (CMCSA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Comcast Corporation (CMCSA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.