Shares of the largest U.S. cable operator, Comcast Corp (CMCSA), were down over 8.5% during pre-market trading today at the time of writing, despite reporting upbeat Q2 results.
Investors were more bothered by the zero broadband customer additions reported during the quarter.
Comcast’s Q2 Beat
Positively, adjusted earnings of $1.01 per share grew 20.2% year-over-year and beat analysts’ expectations of $0.92 per share. The company reported earnings of $0.84 per share for the prior-year period.
Further, revenues jumped 5.1% year-over-year to $30.02 billion and exceeded consensus estimates of $29.7 billion.
However, the company stated that subscriber growth in its broadband and streaming businesses remained flat, with total broadband customers of 32.2 million at the end of the quarter. In contrast, broadband revenue grew 6.8% year-over-year to $6.1 billion, mainly driven by higher rates.
Concurrent with the earnings, Comcast declared a dividend of $0.27 per share. The dividend is payable on October 26 to shareholders of record on October 4. The annual dividend of $1.08 per share now reflects a dividend yield of 2.4%.
Comcast CEO’s Comments
Comcast CEO, Brian L. Robert, commented, “Looking ahead, our company is in an enviable strategic and financial position, with substantial cash flow generation and a strong foundation for innovation.”
Wall Street’s Take on Comcast
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 12 Buys, six Holds, and one Sell. The average Comcast price target of $50.58 implies 29.16% upside potential to current levels.
Comcast’s High Smart Score on TipRanks
Comcast scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Concluding Thoughts
Investors were concerned that broadband growth, which registered epic growth during the pandemic years, was now seeing a declining trend for the past few months.
Although Comcast management had warned investors of modest subscriber growth earlier this year and considers the dip as temporary, driven by an uncertain macroeconomic environment, investors will wait to see the expected recovery towards the end of the year.
