Should Value Investors Buy Comcast (CMCSA) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Comcast (CMCSA). CMCSA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 13.23, which compares to its industry's average of 18.34. Over the past 52 weeks, CMCSA's Forward P/E has been as high as 14.59 and as low as 11.94, with a median of 13.35.
We also note that CMCSA holds a PEG ratio of 1.12. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CMCSA's industry currently sports an average PEG of 1.55. Over the past 52 weeks, CMCSA's PEG has been as high as 1.19 and as low as 0.93, with a median of 1.11.
We should also highlight that CMCSA has a P/B ratio of 2.49. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.03. Within the past 52 weeks, CMCSA's P/B has been as high as 2.60 and as low as 2.08, with a median of 2.32.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CMCSA has a P/S ratio of 1.95. This compares to its industry's average P/S of 2.11.
Finally, we should also recognize that CMCSA has a P/CF ratio of 8.13. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CMCSA's current P/CF looks attractive when compared to its industry's average P/CF of 9.48. Over the past 52 weeks, CMCSA's P/CF has been as high as 8.49 and as low as 4.45, with a median of 5.15.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Comcast is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CMCSA feels like a great value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.