Morningstar Raises Fair Value for Comcast After Strong Quarter

Steady cable results, continued theme park strength, and exceptional performance at the box office marked

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.

Internet access customer growth remains very strong with net additions of 180,000, in line with the trend seen in recent years. Again, Comcast easily bested Verizon on this metric, as its rival lost 25,000 net customers during the quarter. Revenue per Internet access customer continues to increase at a solid clip, up 3.7% versus a year ago.

The fantastic performance of Furious 7 and Jurassic World at the box office fueled a 20% jump in revenue at NBCU versus a year ago. Theme park revenue increased 26% year over year. On the negative side, both the cable and broadcast television network segments saw revenue decline during the quarter, with cable ad revenue down 3% versus a year ago. We continue to believe that trends in the cable networks warrant careful attention, as this segment drives nearly two-thirds of NBCU profits.

Morningstar Premium Members gain exclusive access to our full Analyst Reports, including fair value estimates, consider buying/selling prices, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.