Boosted by Growth in Its Internet Business, Comcast Beats Earnings Expectations

Cable company increases dividend

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Jan 24, 2018
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Media and cable giant Comcast Corp. (CMCSA, Financial) reported strong fourth-quarter and full-year 2017 earnings before the opening bell on Wednesday, buffered by its internet and film businesses.

Earnings

The Philadelphia-based company posted adjusted earnings per share of 49 cents, topping Thomas Reuters’ estimates of 47 cents. Quarterly revenue of $21.92 billion beat expectations of $21.82 billion and increased 4.2% from $21.03 billion in the prior-year quarter.

Following the announcement, the stock, which closed at $42.44 on Tuesday, traded relatively flat.

For the year, the company posted adjusted earnings of $2.06 per share on $84.5 billion in revenue.

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In a statement, Chairman and CEO Brian Roberts lauded the company’s performance.

“I am exceptionally proud of our performance this past year, and we enter 2018 with significant momentum,” he said. “In 2017, we achieved strong financial and operational results while also delivering new innovations, experiences and must-see content to people around the world.”

Cable and internet business

Despite a large number of customers cutting the cord on their Xfinity cable services, Comcast was boosted by strong growth in its high-speed internet and business services during the quarter.

While the company lost 33,000 video customers as a result of more “aggressive” offers from competitors, the losses were narrower than expected, according to CNBC. Analysts expected Comcast to lose 45,000 video customers. It also lost 13,000 voice costumers, narrower than the expected loss of 23,000 customers.

In its internet business, the company gained 350,000 customers, exceeding expectations of 312,000.

Comcast now has 29.3 million total Xfinity customers.

Media business

Comcast said its media business, NBCUniversal, recorded its most profitable year ever, increasing 4% year over year to $33 billion. The company attributed its performance to strong growth in its filmed entertainment business, with revenue increasing 20.4% to $7.7 billion as a result of higher distribution and content licensing.

In the fourth quarter, however, revenue in the film segment fell approximately 5% despite releasing hits like “Pitch Perfect 3.”

Comcast also recorded revenue growth from its theme parks, broadcast and cable networks during the quarter.

Tax Cuts and Jobs Act

After the Tax Cuts and Jobs Act was passed by Congress in December, Comcast announced it was giving $1,000 bonuses to more than 100,000 employees. According to Bloomberg, the bonuses impacted Comcast’s fourth-quarter earnings by about $171 million.

The media giant is not done giving, however, as Comcast announced in its report that it is increasing its dividend by 21% to 76 cents. In addition, it plans to buy back a minimum of $5 billion worth of stock in 2018.

Looking ahead, the company has a big quarter coming up as it is covering both the Super Bowl and the 2018 Winter Olympic Games in PyeongChang, South Korea.

“The Olympics highlight our strengths and capabilities across Comcast NBCUniversal, as we combine the storytelling of NBC with Comcast technology to create a truly spectacular viewing experience,” Roberts said. “Overall, we feel great about our company and our positioning as we head into the year.”

Stock price

With a market cap of $198.5 billion, Comcast’s shares were trading around $42.47 on Wednesday with a price-earnings ratio of 20.41, a price-book ratio of 3.58 and a price-sales ratio of 2.44. GuruFocus estimates the stock gained 19% in 2017. Year to date, it is up 4%.

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Disclosure: I do not own any stocks mentioned.