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Comcast Corp Class A CMCSA

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Trian’s Comcast Stake Highlights the Valuation Disconnect Among Cable Firms

Analyst Note

| Michael Hodel, CFA |

Nelson Peltz’s Trian Fund Management has taken a stake in Comcast, stating that it believes Comcast shares are undervalued and that it is having conversations with the company. While the move doesn’t alter our view of the firm, we believe it highlights a valuation disconnect that emerged in recent months between Comcast and pure-play cable peer Charter Communications. Charter shares have gained nearly 30% year to date, while Comcast has barely budged. Charter shares now sit at a 30% premium versus our fair value estimate, while Comcast trades at a small discount. We continue to believe that Comcast shares are the most attractive among cable firms. For investors looking for a highly leveraged pure-play cable stock, we would choose Altice USA over Charter at current valuations.

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Company Profile

Business Description

Comcast is made up of three parts. The core cable business owns networks capable of providing television, Internet access, and phone services to roughly 59 million U.S. homes and businesses, or nearly half of the country. About half the homes in this territory subscribe to at least one Comcast service. Comcast acquired NBCUniversal from General Electric in 2011. NBCU owns several cable networks, including CNBC, MSNBC, and USA, the NBC broadcast network, several local NBC affiliates, Universal Studios, and several theme parks. Sky, acquired in 2018, is the dominant television provider in the U.K. and has invested heavily in exclusive and proprietary content to build this position. The firm is also the largest pay-television provider in Italy and has a presence in Germany and Austria.

One Comcast Center
Philadelphia, PA, 19103-2838
T +1 215 286-1700
Sector Communication Services
Industry Entertainment
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 190,000