Telecommunications and media company Comcast (NASDAQ:CMCSA) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 1.2% year on year to $30.06 billion. It made a non-GAAP profit of $1.04 per share, improving from its profit of $0.92 per share in the same quarter last year.

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Comcast (CMCSA) Q1 CY2024 Highlights:

• Revenue: $30.06 billion vs analyst estimates of $29.85 billion (small beat)

• Adjusted EBITDA: $9.36 billion vs analyst estimates of $9.39 billion (small miss)

• EPS (non-GAAP): $1.04 vs analyst estimates of $0.99 (5.3% beat)

• Gross Margin (GAAP): 70.6%, up from 69.7% in the same quarter last year

• Free Cash Flow of $4.54 billion, up 166% from the previous quarter (large beat)

• Total domestic broadband customers: 32.19 million (in line)

• Market Capitalization: $159.7 billion

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

Cable and Satellite

The massive physical footprints of 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 traditional cable subscriptions in favor of streaming options. While that is a headwind, this affinity to streaming means more households need high-speed internet, and companies that successfully serve customers can enjoy high retention rates and pricing power since the options for internet connectivity in any geography is usually limited.

Sales Growth

A company’s long-term performance can give signals about its business quality. Any business can put up a good quarter or two, but many enduring ones muster years of growth. Comcast's annualized revenue growth rate of 2.3% over the last five years was weak for a consumer discretionary business.

Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Comcast's recent history shines a dimmer light on the company as its revenue was flat over the last two years.

We can dig even further into the company's revenue dynamics by analyzing its number of total domestic broadband customers and total domestic video customers, which clocked in at 32.19 million and 13.62 million in the latest quarter. Over the last two years, Comcast's total domestic broadband customers were flat while its total domestic video customers averaged 11.7% year-on-year declines.

This quarter, Comcast grew its revenue by 1.2% year on year, and its $30.06 billion of revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 1.8% over the next 12 months, an acceleration from this quarter.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, Comcast has shown decent cash profitability, giving it some reinvestment opportunities. The company's free cash flow margin has averaged 10.5%, slightly better than the broader consumer discretionary sector.

Comcast's free cash flow came in at $4.54 billion in Q1, equivalent to a 15.1% margin and up 19.5% year on year. Over the next year, analysts' consensus estimates show they're expecting Comcast's LTM free cash flow margin of 11.2% to remain the same.

Key Takeaways from Comcast's Q1 Results

It was an unexciting quarter, with revenue slightly ahead and adjusted EBITDA slightly below. The all-important volume metric of domestic broadband subscribers was in line with expectations. Zooming out, we think this was a mixed quarter. Investors were likely expecting more, and the stock is down 3.4% after reporting, trading at $38.8 per share.

So should you invest in Comcast right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.