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Morningstar Raises Fair Value for Comcast After Strong Quarter

The wide-moat media company is still not a bargain, though.


Steady cable results, continued theme park strength, and exceptional performance at the box office marked  Comcast Corp's (CMCSA) second quarter. NBC Universal's core cable and broadcast television segments showed weakness during the quarter, but we were impressed by Comcast's results overall. We are increasing our fair value estimate to $54 from $50, which leaves the stock modestly overvalued, in our view. Our wide moat rating, which is based on the firm’s network strength, is unchanged.

Comcast lost 69,000 net television customers during the quarter, a sharp improvement from a year ago (144,000 net losses) in what is typically the seasonally weakest period of the year. This improvement is impressive in light of the relatively weak performance in the television business over the past two quarters and the overall maturity of the market. Rival Verizon, by contrast, posted its weakest television customer growth during the quarter since it entered the business a decade ago. The X1 platform, which nearly a third of Comcast's triple-play customers now use, and efforts to improve customer service have clearly provided a benefit to the firm. 

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Michael Hodel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.