Demand for digital entertainment has increased substantially over the past two years. As cable remains the dominant method for internet connection, cable providers should benefit. Although cable provider stocks Comcast Corporation (CMCSA) and Charter Communications (CHTR) witnessed price declines amid the broader market sell-off this year, we think these stocks are still worth owning. Keep reading….
shutterstock.com – StockNews The entertainment industry saw a huge shift towards in-home entertainment during the COVID-19 pandemic. Over-the-top (OTT) streaming services, along with traditional TV and video games, saw huge demand. The total global entertainment and media revenue rose 10.4% in 2021 after a 2.3% dip in 2020. This industry is expected to grow at a 4.6% CAGR between 2022-2026.
In addition to the pandemic-led preferential changes, increased penetration of the internet, rapid technological progress, and massive use of social media as an aggregator platform are expected to bolster this industry’s growth prospects. And as cable remains the dominant method for connecting homes to the internet, cable providers should benefit amid the growing streaming services demand.
Although cable provider stocks Comcast Corporation (CMCSA) and Charter Communications, Inc. (CHTR) suffered significant declines in price amid the broader market sell-off this year, we think investors should not get rid of these stocks just yet.
Comcast Corporation (CMCSA)
CMCSA operates as a media and technology company worldwide through its Cable Communications; Media; Studios; Theme Parks; and Sky segments.
In October, CMCSA opened a new Xfinity store in Burlington to meet the needs of its local customers. The new store provides a complete line of Xfinity products and services ranging from smart home security solutions to Xfinity Mobile and Supersonic WiFi. This should help the company expand its revenue stream.
CMCSA’s revenue increased 5.1% year-over-year to $30.02 billion for the second quarter that ended June 30, 2022. Its operating income came in at $6.37 billion, up 15.6% year-over-year. Also, its adjusted net income came in at $4.51 billion, up 14.3% year-over-year, while its adjusted EPS stood at $1.01, up 20.2% year-over-year.
Street expects CMCSA’s revenue to increase 4.5% year-over-year to $121.66 billion in fiscal 2022, while its EPS is expected to grow 11.4% year-over-year to $3.60 in the same period. It also surpassed EPS estimates in all four trailing quarters.
The stock has slumped 2.6% intraday and 41.8% year-to-date to close the last trading session at $29.27.
CMCSA’s POWR Ratings reflect its promising outlook. The stock has an overall grade of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
It also has a B grade for Value and Quality. Within the Entertainment – TV & Internet Providers industry, it is ranked first among nine stocks.
Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for CMCSA.
Charter Communications, Inc. (CHTR)
CHTR operates as a broadband connectivity and cable operator company serving residential and commercial customers in the United States. It offers subscription-based video services, voice communications services, mobile services, and internet services.
During the second quarter ended June 30, 2022, CHTR’s total revenues increased 6.2% year-over-year to $13.60 billion. Net income attributable to CHTR increased 44.2% year-over-year to $1.47 billion, while its adjusted EBITDA came in at $5.51 billion, up 9.7% year-over-year.
Analysts expect CHTR’s EPS to increase 29.7% year-over-year to $8.43 in the quarter ended September 2022. Also, the consensus revenue estimate of $13.68 billion indicates a 4.3% year-over-year growth in the same period.
The stock has gained marginally intraday to close the last trading session at $314.97. It slumped 52.1% year-to-date.
It is no surprise that CHTR has an overall B rating, which equates to a Buy in our proprietary rating system. It also has a B grade for Growth. The stock is ranked second in the same industry.
To access CHTR’s additional ratings for Value, Momentum, Sentiment, Stability, and Quality, click here.
CMCSA shares were trading at $29.33 per share on Monday afternoon, up $0.06 (+0.20%). Year-to-date, CMCSA has declined -40.18%, versus a -23.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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