CMCSA Comcast
Ex-growth cable cash cow priced for decline; value hinges on broadband erosion staying slow.
The story
Comcast is a mature cable and media conglomerate whose broadband franchise, still the cash engine, is losing subscribers to fiber overbuilders and fixed-wireless, while NBCUniversal, Peacock, theme parks and Sky provide diversified but lower-margin growth. With the cable networks spun off into Versant, what remains is a harvest-phase business: flat revenue, heavy capex, large buybacks and substantial debt. The moat (dense hybrid fiber-coax footprint, scale in content and parks) is eroding slowly, not collapsing.
Revenue has compounded under 1% for five years and broadband net losses offset parks and Peacock gains, so growth stays near zero and terminal growth sits at 0.5%, well below the risk-free rate. The 18% target margin normalizes the noisy history (10.9% to 24.4%, with TTM 14.7% depressed by one-offs) toward sustainable cable-plus-media economics rather than the peak, and sales-to-capital of 0.8 reflects capex that roughly matches D&A with modest incremental capital needs.
Value drivers
| Revenue growth (Y1) | 0.0% |
| Terminal growth | 0.5% |
| Forecast horizon | 6y |
| Target operating margin | 18.0% |
| Years to target margin | 3 |
| Sales-to-capital | 0.80 |
| Beta | 0.85 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 7.8% |
| Terminal WACC | 8.1% |
Valuation bridge
| PV of explicit FCFF | 75.59B |
| PV of terminal value | 136.60B |
| Equity value | 119.31B |
| ÷ shares → per share | $33.62 |
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 124.91B | 0.0% | 15.8% | 15.06B | 0 | 15.06B | 13.97B |
| 2 | 125.03B | 0.1% | 16.9% | 16.13B | 156.13M | 15.97B | 13.73B |
| 3 | 125.28B | 0.2% | 18.0% | 17.21B | 312.57M | 16.89B | 13.47B |
| 4 | 125.66B | 0.3% | 18.0% | 17.26B | 469.80M | 16.79B | 12.41B |
| 5 | 126.16B | 0.4% | 18.0% | 17.33B | 628.28M | 16.70B | 11.45B |
| 6 | 126.79B | 0.5% | 18.0% | 17.41B | 788.49M | 16.63B | 10.57B |
Key risks
- Accelerating broadband subscriber losses to fiber and fixed-wireless forcing price cuts
- Peacock and parks capital intensity failing to earn the cost of capital
- Roughly $89B net debt limiting flexibility if cash flow erodes
Catalysts
- Stabilization of broadband net adds via convergence with wireless bundling
- Epic Universe ramp and Peacock reaching sustained profitability