I recently finished a job consulting someone to help them balance out what some of their managed accounts owned. One name I saw twice was Comcast Corp (CMCSA or CMCSK).
Comcast is one of the giant cable TV companies. There is no shortage of information about this company if you want to look it up. The chart shows that Comcast has the dubious distinction of having trailed the S+P 500 over the last five years. Comcast is 40% owned by mutual funds/institutions, none of the 38 analysts that follow it (according to Yahoo finance) give it a sell rating. I take this as meaning the stock is over owned and over sponsored. For these reasons the stock reminds me of Pfizer.
It may be a great company, with a lot going for it but none of that is obvious to me. None of the numbers for this company seem to stand up very well to other cable companies.
In general terms, media stocks tend to do better later in the stock market cycle. This is because the advertising market usually does better when there is less ambiguity about the state of the economy.
Cable TV is a tough business, I doubt that bulls on the stock would disagree. I could be dead wrong and my article could mark a bottom but it seems that demand would only come from new products and that existing services face a continuous threat of becoming obsolete.
When I think about buying a stock I like the catalyst for higher prices to be very simple. This is not the case for me with Comcast. Some may be tempted to think of it like a utility of sorts but it pays no dividend. If the stock goes up it can do it with out me.
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2 comments:
I, for one, live in a media market dominated by Comcast. I have had numerous personal issues with their shoddy customer service and poor technical knowledge of their own products (broadband internet). On any given day you can call their customer service line and get the pre-recorded message that "we are aware that there are cable problems in county X, county Y, county Z, and other counties, if you live in one of those counties you do NOT need to speak with a representative".
I am not alone, for all of my neighbors and many close acquaintances have had similar issues.
It's only a matter of time until technology allows us to have more choices for cable, broadband, etc. and when that happens a mass exodus will take place away from these media companies that relish their monopolistic position because they own the wires connected to our homes.
I am actually warming to Comcast.....they have pricing power (you know, those 3-5% annual increases in your cable bill) and I see them gathering customers due to the attractive bundle (cable, broadband, voip, dvr, vod) they have to offer. In the future, I think this arsenal will help them better compete against the satellite providers and take broadband and telco share from the RBOCs. Case in point, I would like to switch to DTV for the TIVO offering but haven't b/c Comcast is my broadband provider and they provide me with a decent discount b/c I am also a cable subscriber. So the bundling worked on me and i am just waiting the availability of voip and dvr in my town.
Another thing to consider, Comcast recently completed upgrading their network so that it can provide the above bundle which means capex should drop and FCF should rise in the future.
Some astute investors, like Berkshire, have recently established positions in Comcast....the speculation is that it was Lou Simpson on behalf of the Geico float.
Parkite
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