Comcast Corp. (CMCSA) reported excellent fourth-quarter 2010 financial results, which easily beats the Zacks Consensus Estimates. The company has become a media baron after completing the acquisition of majority stake in NBC Universal from General Electric Co. (GE). Some of the TV channels of NBC Universal has global acceptance. At present, Comcast turned out to be highly diversified entertainment house, offering cable-TV/high-speed Internet connectivity, producing rich TV entertainment and film contents and operating a series of theme parks.
In the last one year, the company posted strong growth in revenue and free cash flow. Decline in basic video customers was more than offset by massive growth of high-speed Internet, digital video and voice subscribers. However, the stock price has moved up by a whopping 56% in the last one year. We believe that Comcast is currently fairly valued and therefore maintain our long-tern Neutral recommendation.
NBC Universal is U.S.’s fourth largest media company enriched with vast content library. This will help Comcast to expand its video-on-demand opportunities. We believe merger with NBC Universal will not only give Comcast a competitive edge over its pay-TV rivals but also place the company head-on with media giants such as Walt Disney Co. (DIS) and News Corp. (NWSA) Comcast, which is known for highly efficient management tactics, may now significantly develop NBC Universal’s sports and movie theaters that collect hefty fees from cable operators.
Recently, in a significant drive to raise its shareholders’ wealth, the Board of Directors of Comcast has raised annualized dividend rate by 19% to $0.45 per share. Furthermore, the Board of Comcast also declared its intention to speed up the share buy-back program and repurchase the remaining $2.1 billion worth of share under authorization by end 2011. This will be an increase of 75% year over year.
In the fourth quarter of 2010, advertising revenue of Comcast increased 29% year over year. This trend is likely to continue in near future as a result of an improving U.S. economy. Comcast is currently generating around $2.5 billion in total advertising revenue per annum. After acquiring majority share of NBC Universal, that figure may soar to more than $10 billion per annum.
COMCAST CORP A (CMCSA): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis Report
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