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Is There Now An Opportunity In Comcast Corporation (NASDAQ:CMCSA)?
Comcast Corporation (NASDAQ:CMCSA) received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$41.11 at one point, and dropping to the lows of US$33.98. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Comcast's current trading price of US$36.24 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Comcast’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Comcast
What's The Opportunity In Comcast?
Comcast appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 28.45x is currently well-above the industry average of 13.98x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that Comcast’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Comcast generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Comcast. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in CMCSA’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe CMCSA should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on CMCSA for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for CMCSA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Comcast, you'd also look into what risks it is currently facing. For example - Comcast has 3 warning signs we think you should be aware of.
If you are no longer interested in Comcast, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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Find out whether Comcast is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Comcast Corporation operates as a media and technology company worldwide.
Established dividend payer and fair value.