Telecommunications and media company Comcast (NASDAQ:CMCSA) reported Q4 CY2024 results topping the market’s revenue expectations, with sales up 2.1% year on year to $31.92 billion. Its non-GAAP profit of $0.96 per share was 11.4% above analysts’ consensus estimates.
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Comcast (CMCSA) Q4 CY2024 Highlights:
- Revenue: $31.92 billion vs analyst estimates of $31.61 billion (2.1% year-on-year growth, 1% beat)
- Adjusted EPS: $0.96 vs analyst estimates of $0.86 (11.4% beat)
- Adjusted EBITDA: $8.81 billion vs analyst estimates of $8.53 billion (27.6% margin, 3.2% beat)
- Operating Margin: 15.6%, up from 14.3% in the same quarter last year
- Free Cash Flow Margin: 10.2%, up from 5.5% in the same quarter last year
- Domestic Broadband Customers: 31.84 million, down 411,000 year on year
- Domestic Video Customers: 12.52 million, down 1.58 million (slight beat)
- Market Capitalization: $143 billion
“We had the best financial performance in our company’s 60-year history with record revenue, EBITDA and EPS along with significant free cash flow," said Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation.
Company Overview
Formerly known as American Cable Systems, Comcast (NASDAQ:CMCSA) is a multinational telecommunications company offering a wide range of services.
Wireless, Cable and Satellite
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.
Sales Growth
A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Comcast grew its sales at a weak 2.6% compounded annual growth rate. This fell short of our benchmarks and is a poor baseline 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 history shows its demand slowed as its revenue was flat over the last two years. 
Comcast also discloses its number of domestic broadband customers and domestic video customers, which clocked in at 31.84 million and 12.52 million in the latest quarter. Over the last two years, Comcast’s domestic broadband customers were flat while its domestic video customers averaged 12.1% year-on-year declines. 
This quarter, Comcast reported modest year-on-year revenue growth of 2.1% but beat Wall Street’s estimates by 1%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.
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Cash Is King
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 10.4% over the last two years, slightly better than the broader consumer discretionary sector.
Comcast’s free cash flow clocked in at $3.26 billion in Q4, equivalent to a 10.2% margin. This result was good as its margin was 4.7 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.
Over the next year, analysts predict Comcast’s cash conversion will slightly improve. Their consensus estimates imply its free cash flow margin of 10.1% for the last 12 months will increase to 11.9%, giving it more flexibility for investments, share buybacks, and dividends.
Key Takeaways from Comcast’s Q4 Results
It was encouraging to see Comcast beat analysts’ EPS expectations this quarter. On the other hand, both broadband and video customers continue to decline year on year, with the former missing expectations. Shares traded down 2.9% to $36.25 immediately following the results.
Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.