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What Do Comcast’s Newly Added Risk Factors Reveal?

Comcast (CMCSA) is a global media and technology company. It provides broadband, wireless, and video services through brands such as Universal Pictures, Xfinity, Peacock, and Sky.

For Q4 2021, Comcast reported a 9.5% year-over-year jump in revenue to $30.3 billion, exceeding the consensus estimate of $29.73 billion. It posted adjusted EPS of $0.77, which rose from $0.56 in the same quarter in the previous year and beat the consensus estimate of $0.73.

Comcast bought back $4 billion worth of its stock during 2021 after resuming its buyback program toward the end of Q2. It recently boosted its repurchase program to $10 billion, effective from January 2022.

Comcast plans to distribute a quarterly dividend of $0.27 per share on April 27. For 2022, the company has increased its annualized dividend by 8% over the previous year to $1.08 per share. Comcast is among the highest yielding stocks in its category, currently offering a dividend yield of 2.04% compared to the sector average of 0.45%.

With this in mind, we used TipRanks to take a look at the risk factors for Comcast.

Risk Factors

According to the new TipRanks Risk Factors tool, Comcast’s top risk categories are Tech and Innovation, Production, Ability to Sell, and Macro and Political, each accounting for four out of the total 21 risks identified for the stock. Legal and Regulatory and Finance and Corporate are the next two major risk categories, with three and two risk factors, respectively. Comcast has recently updated its profile with several new risk factors. 

Comcast maintains a complex network and information systems to support its business activities. It explains that those systems have become a constant target of cyberattacks and other malicious activities. While the company has taken various measures to secure its systems, it cautions that a breach may still occur and expose it to many problems. If the systems are breached, Comcast warns that its operations could be disrupted, it could face significant regulatory fines, its reputation could be damaged, and its operating results could be adversely affected.

The company informs investors that its products and properties are vulnerable to damage from events such as natural disasters, terrorist attacks, and outbreaks of infectious diseases. It cautions that such events could result in a variety of adverse impacts on its business, such as damage to the network, power outages, and reduced demand for Comcast’s products and services. In addition to the potential loss of revenue, the company warns that such incidents could expose it to lawsuits and fines, and it may have to bear significant costs to repair its damaged infrastructure.

Comcast reminds investors that changing consumer behavior is challenging its traditional business model. It explains that as people increasingly turn to video streaming services, its traditional pay-Tv customers and the subscription fees they pay decrease. The rise of streaming services has also continued to increase competition in the video business. Comcast warns that its failure to anticipate and adapt to changes in consumer behavior and emerging competitors could harm its business and operating results.

Analysts’ Take

Barclays analyst Kannan Venkateshwar recently maintained a Buy rating on Comcast stock but lowered the price target to $56 from $60. Venkateshwar’s reduced price target still suggests 12.81% upside potential. The analyst noted that Comcast may see slower growth in cash flows in 2022 but noted that share repurchases should accelerate. 

Consensus among analysts is a Moderate Buy based on 11 Buys, 3 Holds, and 1 Sell. The average Comcast price target of $58.13 implies 17.10% upside potential to current levels.

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