Comcast Corporation (CMCSA, Financial) recently revealed its first quarter results for fiscal 2015 with both revenues and earnings exceeding the consensus estimate. The company logged GAAP net income of $2,059 million or $0.81 a share compared to the year-ago quarter’s figure of $1,871 million or $0.71 a share. In terms of non-GAAP earnings, Comcast reported adjusted EPS of $0.79 a share, beating the consensus estimate of $0.74 a share. Following the results, Comcast shares climbed to $60.10 before slipping to $58.59 at closing bell.
Broadband revenues, better margins boost growth
Comcast, which competes with businesses such as Dish Network Corp. (DISH, Financial), DirecTV (DTV, Financial) and Time Warner Cable Inc. (TWC, Financial) in the diversified entertainment market, reported revenues of $17.8 billion for Q1 2015, up 2.6% compared to the prior-year quarter and beating the consensus estimate of $17.35 billion. With its quarterly operating income coming in at $3.89 billion, up 9% year-over-year, and operating expenses increasing 0.2% compared to the year-ago levels, Comcast saw its operating margin growing to 21.8% from 20.5% in the prior-year quarter.
Segmentwise, Comcast witnessed a 6.3% year-over-year growth in revenues at its Cable Communications division to $11.43 billion, with a 3% year-over-year growth in revenues from video subscriptions to $5.3 billion while revenues from high speed internet grew 10.7% to $3 billion. While the number of video subscribers dropped by 8,000, the company added 407,000 new high-speed internet customers. Revenues from Business Service climbed over 20% year over year to $1.1 billion during the quarter, with overall cable operating cash flow margins remaining steady at 40.9%. However, Voice and Advertising revenues dipped 1.5% and 0.7% respectively to $906 million and $504 million compared to the prior-year quarter.
Concurrently, Comcast’s total quarterly revenues from its NBCUniversal division came in a $6.60 billion, down 4% year over year. The segment saw a significant 33% growth in revenues to $651 million from Theme Parks following the success of its "The Wizard World of Harry Potter" based in Orlando, while revenues from Filmed Entertainment grew 7% year over year to $1.445 billion during the quarter. However, while the company’s Broadcast and Cable revenues also grew by 5.5% and 4.9% respectively excluding one-time sports events such as the Sochi Olympics in 2014 and the Super Bowl in 2015, revenues at the segment saw an overall decline of 4% to $6.6 billion on a GAAP basis.
Final thoughts
Comcast recently opted out of its proposed $45.2 billion acquisition of Time Warner Cable owing to regulatory issues. Despite the failed takeover bid into the which the company had already sunk in $99 million, Comcast reported upbeat Q1 results for fiscal 2015 with estimate-beating earnings and revenues, indicating that the company still remains well positioned in the fast changing broadband and cable industry. Although Comcast saw decline in revenues at its NBCUniversal division, Comcast is putting considerable efforts into the overhauling of the media company that it acquired from General Electric Co (GE, Financial). At the same time, Comcast also surprised shareholders with a buyback of 35.1 million shares worth a total of $2 billion, while paying out dividends of $572 million. Further, the company also authorized an almost 60% increase in its buyback program for 2015 to $6.75 billion. Experts are looking at an average annual earnings growth rate of 11.29% for Comcast over the next five years and earnings of $0.83 a share for Q2 2015. Consequently, the Comcast stock currently carries a "buy" guidance.
