Comcast (CMCSA)

Telecommunications and media company Comcast (NASDAQ:CMCSA) announced better-than-expected revenue in Q3 CY2025, but sales fell by 2.7% year on year to $31.2 billion. Its non-GAAP profit of $1.12 per share was 1.7% above analysts’ consensus estimates.

Company Overview

Formerly known as American Cable Systems, Comcast (NASDAQ:CMCSA) is a multinational telecommunications company offering a wide range of services.

The massive physical footprints of cell phone towers, fiber in the ground, or satellites in space make it challenging for companies in this industry to adjust to shifting consumer habits. Over the last decade-plus, consumers have ‘cut the cord’ to their landlines and traditional cable subscriptions in favor of wireless communications and streaming video. These trends do mean that more households need cell phone plans and high-speed internet. Companies that successfully serve customers can enjoy high retention rates and pricing power since the options for mobile and internet connectivity in any geography are usually limited.

Competitors in the telecommunications and media services industry include Charter Communications (NASDAQ:CHTR), Altice USA (NYSE:ATUS), Dish Network (NASDAQ:DISH).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Comcast’s sales grew at a sluggish 3.4% compounded annual growth rate over the last five years. This fell short of our benchmark for the consumer discretionary sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Comcast’s recent performance shows its demand has slowed as its annualized revenue growth of 1% over the last two years was below its five-year trend.

We can dig further into the company’s revenue dynamics by analyzing its number of domestic broadband customers and domestic video customers, which clocked in at 31.44 million and 11.52 million in the latest quarter. Over the last two years, Comcast’s domestic broadband customers averaged 1.1% year-on-year declines while its domestic video customers averaged 11.5% year-on-year declines.

This quarter, Comcast’s revenue fell by 2.7% year on year to $31.2 billion but beat Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months. Although this projection implies its newer products and services will fuel better top-line performance, it is still below the sector average.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Comcast’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 18.2% over the last two years. This profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.

In Q3, Comcast generated an operating margin profit margin of 17.7%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Comcast’s EPS grew at an unimpressive 9.2% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 3.4% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

In Q3, Comcast reported adjusted EPS of $1.12, in line with the same quarter last year. This print beat analysts’ estimates by 1.7%. Over the next 12 months, Wall Street expects Comcast’s full-year EPS of $4.42 to shrink by 1.1%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Comcast has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 11.8% over the last two years, slightly better than the broader consumer discretionary sector.

Comcast’s free cash flow clocked in at $4.95 billion in Q3, equivalent to a 15.9% margin. This result was good as its margin was 5.2 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.

Over the next year, analysts predict Comcast’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 14.7% for the last 12 months will decrease to 12.6%.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Comcast historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 9%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Comcast’s ROIC averaged 3.8 percentage point increases each year. This is a good sign, and we hope the company can continue improving.

Comcast reported $9.33 billion of cash and $99.06 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $38.29 billion of EBITDA over the last 12 months, we view Comcast’s 2.3× net-debt-to-EBITDA ratio as safe. We also see its $2.10 billion of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see Comcast beat analysts’ revenue and EPS expectations this quarter. On the other hand, the business lost 104,000 broadband customers, marking the fourth straight quarter of losses. Zooming out, we think this was a mixed quarter. The stock traded up 1.4% to $28.91 immediately after reporting.

Updated: December 4, 2025 at 9:56 PM EST

Before deciding whether to buy Comcast or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Comcast falls short of our quality standards. First off, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. On top of that, Comcast’s number of domestic broadband customers has disappointed, and its Forecasted free cash flow margin suggests the company will ramp up its investments next year.

Comcast’s P/E ratio based on the next 12 months is 6.8x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $34.65 on the company (compared to the current share price of $27.17).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.