Should You Stay Away From Comcast (CMCSA) Ahead of Q1 Earnings?

Comcast CMCSA is set to report its first-quarter 2024 results on Apr 25.

Comcast has been suffering from a challenging macroeconomic environment. Online video streaming service providers, such as Netflix NFLX, Disney DIS, YouTube and Apple TV+, have become a severe threat to cable TV operators because of solid and diversified content at a cheaper cost. The intensifying competition and cord-cutting have been a headwind for Comcast.

Netflix, Comcast’s nearest rival, is benefiting from a strong subscriber base. In first-quarter 2024, NFLX benefited from its crackdown on password-sharing and ad-supported tier, in addition to the recent price hikes on certain subscription plans. At the end of the first quarter, NFLX had 269.6 million paid subscribers across more than 190 countries globally, up 16% year over year.

Disney is also expected to report an increase in its subscriber base. The company expects Disney+ core subscriber net additions between 5.5 million and 6 million and ongoing positive momentum in ARPU in the fiscal second quarter.

Moreover, the industry-wide trend of declining profitability of residential video services due to increasing programming costs and retransmission fees has made it difficult for traditional companies like Comcast to survive.

Comcast Corporation Price and EPS Surprise

Comcast Corporation Price and EPS Surprise

Comcast Corporation price-eps-surprise | Comcast Corporation Quote

Residential voice services have witnessed a significant decline in revenues due to the increasing usage of wireless voice services. This is expected to have hurt the company’s performance in the to-be-reported quarter.

In the first quarter, CMCSA’s top line is expected to have been affected by a slowing broadband subscriber base due to hybrid-working trends and increased competition from fixed wireless and fiber-based wireline networks.

In the fourth quarter, Comcast lost 34K domestic broadband customers. Moreover, it lost 389K video customers.

The company’s expanded offerings in different connectivity verticals, partnerships and substantial global reach are expected to have aided declining broadband sales in the to-be-reported quarter.

On Mar 7, CMCSA's Xfinity announced a collaboration with DraftKings DKNG to help customers view live odds from DKNG directly on the TV while watching major live sports games and events.

This Zacks Rank #4 (Sell) company’s business services segment is expected to have benefited from an expanding clientele, driven by an advanced and adaptable network infrastructure, particularly in DraftKings.

The Theme Park business is likely to have gained from strong occupancy rates in parks in Osaka, Beijing, Orlando and Super Nintendo World in Hollywood.

Moreover, the company is expected to have benefited from robust movie offerings on Peacock. NBCUniversal has a strong content portfolio, driven by popular TV shows like Saturday Night Live. It also has an impeccable lineup of sports content, including Sunday Night Football, Premier League and Big 10, as well as streaming originals like Poker Face.

At the end of the fourth quarter, Peacock’s paid subscribers in the United States increased 50% year over year to 31 million, including net additions of three million in the reported quarter. Peacock’s revenues increased 57% year over year to $1 billion.

Earnings Expectations

The Zacks Consensus Estimate for first-quarter 2024 revenues is pegged at $29.81 billion, indicating growth of 0.39% from the year-ago quarter’s reported figure.

The consensus mark for earnings has declined 1% to 98 cents per share in the past 30 days, suggesting growth of 6.52% from the figure reported in the year-ago quarter.

Comcast’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.55%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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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.

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