Comcast (CMCSA 36.76, +1.79, +5.13%) is trading higher after the company reported
strong fourth quarter results this morning.
Fourth quarter EBITDA grew 22% to $8.2 bln as revenue grew 26% to $27.8 bln. Results benefited from the company's acquisition of Sky late last year, which gave the largest cable company in the U.S. access to a leading cable and media business in Europe.
The combination of media and cable in the U.S. has worked well since Comcast bought out General Electric's share of NBCUniversal at the beginning of the decade.
Cable Communications reported its best fourth quarter EBITDA growth in eight years, up 7%. Revenue from the segment grew 5% to $5.8 bln as a 2% decline in video (TV) revenue was offset by 10% growth in high-speed internet revenue.
Total customer relationships were up 258,000 to over 30 mln. Comcast lost 29,000 video customers during the quarter but gained 351,000 high-speed internet customers. Both of those figures were roughly in-line with Wall Street's estimates.
Comcast said that video subscriptions fared better than it had forecast in 2018. Churn will continue in video, but the high-speed internet business is the company’s stalwart, growing 5% to over 27 mln subscribers last year.
NBCUniversal reported adjusted EBITDA up 12% to $2.1 bln with revenue up 7% to $9.4 bln. Cable networks revenue grew 9% due to higher distribution and content licensing revenue despite flat advertising revenue hampered by ratings declines. Broadcast television revenue grew 4%, and Filmed entertainment revenue grew 14% due to the success of various releases during the quarter, notably Dr. Seuss' The Grinch and Halloween.
Pro forma revenue or Sky rose 2% with EBITDA up 9%.
Comcast has exceeded EBITDA estimates for four quarters in a row. Much more impressive, the company has reported EBITDA growth 24 years in a row.
Comcast's market capitalization is ~$165 bln. The stock trades at ~8x EV/EBITDA, with a dividend yield just above 2%. The company is increasing its dividend payout by 10% this year. The valuation seems fairly muted considering that EBITDA is expected to grow in the double digits this year.
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