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Its expansion has increased its growth figures vis-à-vis its peers and it has also spread its presence in its commercial services business.
The core cable business is Comcast´s driving force as it represents two thirds of its revenue and more than 80% of EBITDA.
The capability of its networks provides outstanding results because it allows it to offer full TV, Internet and phone services. Furthermore, it has been able to increase its share of customer relationships by taking it away from its rivals, AT&T (T) and Verizon (VZ), which cover 80% of its territory.
In general, despite the drop in fixed-line phone demand, the business is showing positive trends and although the rivals are upgrading its services, Comcast still is the biggest player. Indeed, Verizon´s efforts have given the firm a great network in some areas, but these initiatives only represent 16% of Comcast's current territory.
In terms of owning firms, Comcast has always shown an interest in this sense. It materialized said interest with the acquisition of NBCU, as has been mentioned before. This move has been very profitable for the company, because most of its new venture´s profit comes from cable programming. This is very attractive. In addition, this new acquisition will strengthen Comcast's assets, particularly in sports programming.
Comcast is going down the right path, though it would be better, in terms of management, that the CEO and president positions be separated and that Class-A shareholders be given a vote in corporate matters (the founding family owns all Class-B shares, thus giving them a majority shareholding).
Its expansion in the market, its performance as against competitors and mostly, the acquisition view it has, make it a good choice. There is still more, particularly in terms of the last quarter results.
Generally speaking, results have been solid in the last year. To put it briefly, these results involve:
· An improvement in TV and Internet customers levels
· Better results vis-à-vis its cable peers
· Increased marketing around Xfinity and an upgrade in the digital television platform.
· Four straight quarters of customer growth
· 5% increase in cable revenue y/y and
· 0.6% improvement in cable margin, despite the higher marketing spending, continued pressure in costs and investments in commercial service businesses
However, Comcast also profits from NBCU. And what about it? Revenue has reached an increase of 12% and in the last quarter it has generated $1.6 billion of free cash flow, totaling $5.9 billion for the year.
As an investor, I believe that Comcast is a very good opportunity. I would really like to have a position in it. Its balance sheet is strong with a net debt at 2.3 times EBITDA.
Furthermore, shares trade at $28 each. It is a standard value for a company that is making the biggest effort to capture new customers and expand.
I believe the business will grow a bit faster than 2% annually and will remain steady. It has a sound operating base.
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