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Comcast (CMCSA) Q4 Earnings Beat Estimates, Revenues Up Y/Y

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Comcast (CMCSA - Free Report) reported fourth-quarter 2019 adjusted earnings of 79 cents per share that beat the Zacks Consensus Estimate by 5.3% and increased 9.7% year over year.

Consolidated revenues grew 2% year over year to $28.40 billion and beat the Zacks Consensus Estimate of $28.19 billion.

However, revenues on a pro-forma basis (considering the Sky transaction on Jan 1, 2017) were flat year over year.

Cable Communication Revenue Details

Revenues climbed 2.6% from the year-ago quarter to $14.77 billion. Total Customer Relationships increased 372K to 31.5 million.

High-speed Internet revenues grew 8.8% year over year to $4.79 billion, primarily driven by increased residential high-speed Internet customers and rate adjustments. Total high-speed Internet customer net additions were 442K.
 

Comcast Corporation Price and EPS Surprise

Comcast Corporation Price and EPS Surprise

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Business Services revenues were up 8.8% to $2 billion, driven by customer base expansion.

Wireless revenues jumped 39.4% to $372 million, supported by an increase in the number of customer lines. Comcast added 261K wireless lines in the reported quarter.

Advertising revenues declined 19.1% to $699 million, primarily due to lower political advertising revenues. Excluding political revenues, advertising revenues were flat.

Voice revenues were $944 million, down 3.6% year over year due to a declining number of residential voice customers.

Video revenues dropped 1.2% to $5.51 billion, reflecting a decline in the residential video customer count.

Total video customer net losses were 149K, while total voice customer net losses were 2K.

Other revenues decreased 2.3% from the year-ago quarter to $455 million. Total security and automation customer net additions were 10K in the reported quarter.

NBCUniversal Revenues Decline Y/Y

Revenues declined 2.6% year over year to $9.15 billion.

Cable Networks’ revenues increased 1.2% from the year-ago quarter to $2.93 billion, primarily due to higher content licensing & other revenues (up3.4%) and advertising revenues (up 2%). Distribution revenues were flat year over year.

Broadcast Television revenues increased 2.1% from the year-ago quarter to $3.16 billion, thanks to higher content licensing revenues (up 5.8%) and distribution & other revenues (up 9.9%), partially offset by lower advertising revenues (down 1.5%).

Filmed Entertainment revenues decreased 21% from the year-ago quarter to $1.56 billion. Theatrical revenues declined 59.1% from the year-ago quarter.

Theme Parks revenues were $1.56 billion, up 3.2% year over year on higher guest spending.

Sky Revenue Details

Sky’s pro-forma revenues increased 0.4% year over year to $5.04 billion. At constant currency (cc), revenues increased 1.4%.

Direct-to-consumer revenues were up 1.1% (up 2.3% at cc) from the year-ago quarter to $4.02 billion.

Content revenues rose 2.1% (up 2.7% at cc) to $371 million, benefiting from higher monetization of its slate of original programming and the wholesaling of sports programming.

Advertising revenues deteriorated 5.1% (down4.1% at cc) from the year-ago quarter to $647 million, primarily due to the impact of a change in legislation related to gambling advertisements in the U.K. and Italy along with overall market weakness.

Pro-forma Total Customer Relationships increased 77K to 24 million in the reported quarter.

Operating Details

Consolidated programming & production costs increased 0.5% from the year-ago quarter to $9.30 billion. As a percentage of revenues, programming & production costs shrank 50 basis points (bps) on a year-over-year basis to 32.7%.

Consolidated adjusted EBITDA grew 3% from the year-ago quarter to $8.44 billion. Pro-forma (including Sky operations) adjusted EBITDA increased 2.1%.

Segment-wise, Cable Communications’ adjusted EBITDA rose 5.4% from the year-ago quarter to $5.88 billion. Cable Communications operating expenses increased 0.8% year over year on higher non-programming costs.

Cable Communications results include a loss of $116 million from the wireless business compared with a loss of $191 million in the year-ago quarter.

NBCUniversal’s adjusted EBITDA decreased 4.7% from the year-ago quarter to $2.02 billion, reflecting a decline in Cable Networks, Filmed Entertainment and Theme Parks adjusted EBITDA.

Sky’s adjusted EBITDA on a pro-forma basis was unchanged (up 0.4% at cc) at $765 million. Notably, Sky’s operating costs and expenses rose 0.4% (up1.6% at cc) to $4.28 billion.

Consolidated operating income grew 16.2% year over year to $5.25 billion. Moreover, operating margin expanded 230 bps from the year-ago quarter to 18.5%.

Cash Flow & Liquidity

As of Dec 31, 2019, cash and cash equivalents were $5.50 billion, up from $3.51 billion as of Sep 30.

Moreover, as of Dec 31, consolidated total debt was $102.22 billion, up from $100.89 billion as of Sep 30.

In fourth-quarter 2019, Comcast generated $6.24 billion of cash from operations compared with $5.19 billion in the previous quarter.

Capital expenditures were down 2.5% to $3.1 billion. NBCUniversal’s capital expenditures rose 7.6% to $641 million. Sky reported capital expenditures of $228 million. However, Cable Communications’ capital expenditures decreased 7.8% to $2.1 billion.

Free cash flow was $2.48 billion in the reported quarter, up from $2.1 billion generated in the previous quarter.

Dividends paid out in the fourth quarter were worth $957 million. Comcast also increased its dividend by 10% to 92 cents per share on an annualized basis for 2020.

Zacks Rank & Stocks to Consider

Currently, Comcast carries a Zacks Rank #3 (Hold).

Sony Corp. (SNE - Free Report) , Liberty Global (LBTYA - Free Report) and ViacomCBS (VIAC - Free Report) are stocks worth considering in the broader Consumer & Discretionary sector. While Sony and ViacomCBS sport Zacks Rank #1 (Strong Buy), Liberty Global has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sony, Liberty Global and ViacomCBS are scheduled to report quarterly results on Feb 4, 13 and 20, respectively.

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