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Comcast (CMCSA) Q3 Earnings Beat Estimates, Revenues Lag

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Comcast Corp. (CMCSA - Free Report) reported mixed financial results in the third quarter of 2017. While the top line failed to meet the Zacks Consensus Estimate, the bottom line surpassed the same. Notably, the company lost significant numbers of video and voice customers.  

GAAP net income came in at $2,650 million or 55 cents per share compared with $2,237 million or 46 cents in the prior-year quarter. Quarterly adjusted earnings per share of 52 cents outpaced the Zacks Consensus Estimate of 49 cents.

Comcast Corporation Price, Consensus and EPS Surprise

 

Comcast Corporation Price, Consensus and EPS Surprise | Comcast Corporation Quote

Total revenues were $20,983 million, reflecting a decline of 1.6% year over year lagging the Zacks Consensus Estimate of $21,123 million.

Operating income came in at $4,792 million, increasing 7.9% year over year. Operating margin increased to 22.8% compared with 20.8% in the year-ago quarter. Adjusted EBITDA was $7,180 million, reflecting an increase of 5% year over year. During the third quarter, Comcast repurchased 42.9 million common shares for $1,700 million and paid dividends of $743 million.

In third-quarter 2017, Comcast generated $5,147 million of cash from operations compared with $4,195 million in the year-ago quarter. Free cash flow, in the reported quarter was $2,275 million compared with $1,371 million in the prior-year quarter.

At the end of third-quarter 2017, cash and cash equivalents were $4,114 million, increasing from $3,301 million at the end of 2016. Total debt was $64,961 million compared with $61,046 million at the end of 2016. The debt-to-capitalization ratio at the end of the reported quarter was 0.51 compared with 0.50 at the end of 2016.

Cable Communications Segment

Quarterly total revenues of $13,203 million reflected a 5.1% year-over-year increase. Adjusted EBITDA was $5,246 million, increasing 5.2% year over year. Video revenues were $5,825 million, reflecting an increase of 4.2% from the prior-year quarter. High-Speed Internet revenues totaled $3,709 million, increasing 8.9% year over year. Voice revenues were $840 million, declining 4.5% year over year. Advertising revenues totaled $542 million, decreasing 13.2% from the year-ago quarter. Business Services revenues were $1,575 million, increasing 12.6% year over year. Other revenues were $712 million, increasing 7.8% from the prior-year quarter.

As of Sep 30, 2017, Comcast had 25.519 million (up 4.9% year over year) high-speed Internet customers, 11.565 million (down 0.7% year over year) voice customers, 22.390 million (up 0.2% year over year) video customers and 1.079 million (up 32.4% year over year) security and automation customers. The company added a net of 214,000 high-speed Internet customers and 51,000 security and automation customers but lost 94,000 voice customers and 125,000 video customers in the reported quarter. Comcast also gained 38,000 double-play subscribers and 125,000 single-play subscribers but lost 79,000 triple and quad product customers.

NBC Universal Segment

Quarterly total revenues of $8,014 million displayed a 12.7% year-over-year decrease. Adjusted EBITDA was $2,274 million, reflecting an increase of 6% year over year. Cable Networks revenues were $2,603 million, down 11.5% year over year. Broadcast TV revenues came in at $2,133 million, declining 30.9% year over year. Filmed Entertainment revenues were $1,784 million, declining 0.5% from the year-ago quarter. Theme Parks revenues were $1,550 million, increasing 7.7% year over year.

Latest Developments

Comcast has launched wireless service under the “Xfinity Mobile” brand. However, stiff pricing competition in the industry is a genuine concern. As we have observed, the four major wireless telecommunications companies –Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) , Sprint Corp. (S - Free Report) and T-Mobile US Inc. (TMUS - Free Report) – have joined the unlimited postpaid data plan war in order to stand out in the crowd. Given this scenario, the entry of non-wireless giants like Comcast will further intensify the competition. Comcast currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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