How Comcast Cleared a Low Bar

Comcast Corp. (NASDAQ: CMCSA) reported third-quarter 2020 results before markets opened Thursday. The media firm posted adjusted diluted earnings per share (EPS) of $0.65 on revenues of $25.5 billion. In the same period a year ago, the company reported EPS of $0.79 on revenues of $26.8 billion. Third-quarter results also compare to consensus estimates for a per-share loss of $0.52 on revenues of $24.7 billion.

Comcast reported adding a record total of 633,000 high-speed broadband customers during the quarter. Revenue from the high-speed internet group rose 10% to $5.2 billion, while the company’s cable revenue fell by 2% to $5.4 billion. Of the new-customer total, 625,000 took just one product, and 617,000 of those settled on high-speed internet.

Cancellation of sports events due to the COVID-19 pandemic snipped 3.9% from total cable communications revenue. Ad revenue rose nearly 12% primarily due to increased political advertising.

The company reported a total of 30.1 million high-speed internet customers at the end of the quarter, 20.1 million video customers and 11 million voice customers. Total customer relationships rose from 31.2 million to 32.7 million.

NBCUniversal revenue tumbled by 19% year over year to $6.7 billion. The company’s theme parks revenue plunged by 81% and film revenue dropped by 25%.

Sky, the company’s European satellite service, posted a revenue increase of 5.2% to $4.8 billion, although revenue was flat year over year on a constant currency basis. The increase was entirely due to higher wholesale pricing for European soccer league broadcasts.

Comcast’s new Peacock streaming service was primarily responsible for a third-quarter $259 million adjusted EBITDA loss in the corporate division. For the year to date, the adjusted EBITDA loss in this group totals $1.3 billion, up year over year by $617 million, which the company attributes to costs associated with Peacock and Comcast’s response to the pandemic. CEO Brian Roberts noted that the company has signed up nearly 22 million customers for Peacock, “exceeding our expectations on all engagement metrics in only a few months.”

Roberts added, “Going forward, and as we emerge from the pandemic, we believe we are extremely well positioned to provide seamless and integrated experiences for our customers and to deliver superior long-term growth and returns for our shareholders.”

Comcast paid $1.1 billion in dividends during the quarter and has paid out $3.1 billion in dividends for the first nine months of the year. Operating cash flow improved to $5.2 billion in the third quarter and free cash flow rose to $2.3 billion. Capital spending totaled $2.4 billion in the quarter.

The company did not offer guidance in its earnings announcement. The consensus analysts’ estimate is for fourth-quarter EPS is $0.53 on revenue of $27.2 billion. For the full fiscal year, analysts are looking for EPS of $2.44 and revenue of $102.2 billion.

Shares traded up about 2% in Thursday’s premarket session at $42.83, after falling by 3.4% on Wednesday. The stock’s 52-week range is $31.71 to $47.74, and the consensus price target is $52.00. Comcast pays a dividend yield of 2.12%.