Do not cut the cord of this cable yet

Amid a spike in volatility, Comcast (CMCSA) has seen a substantial downtrend over the past few months. However, its business expansion policies and financial performance are impressive. Additionally, Wall Street analysts see more than 30% upside potential in the stock. So cutting the cord on this cable giant won't be wise. Let’s discuss it in detail….

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Comcast Corporation (CMCSA) operates as a worldwide media and technology company. It operates through Cable Communications; Media; studios; Amusement park; and segments of the sky.

On September 5, 2022, SkyShowtime, a joint venture of CMCSA, announced that it would officially launch on September 20, 2022. SkyShowtime will for the first time ever bring its phenomenal offering of exclusive and iconic entertainment to millions of people across Europe.

Additionally, on August 25, 2022, CMCSA announced the expansion of its fiber-rich network in Spring Hill to improve high-speed connectivity and improve its service with fast and reliable Internet service.

CMCSA is down 5.1% in the past month and 29% year-to-date to close the latest trading session at $34.89. It has lost 42.1% over the past year. However, Wall Street analysts expect the stock to hit $46.18 in the near term, indicating a potential upside of 32.3%.

Here's what could shape CMCSA's performance in the short term:

Strong finances

CMCSA revenue was $30.02 billion for the second quarter ended June 30, 2022, up 5.1% year-over-year. Its operating profit was $6.37 billion, up 15.6% year-on-year. Additionally, its adjusted EBITDA was $9.83 billion, up 10.1% year-over-year.

In addition, its adjusted net income was $4.51 billion, up 14.3% year-on-year, while its adjusted EPS was $1.01, up 20.2% YoY.

Mixed Ratings

CMCSA's forecast EV/EBITDA of 6.78x is 15% lower than the industry average of 7.97x. Its forward P/Cash Flow of 5.65x is 33.6% below the industry average of 8.51x. Additionally, its forward non-GAAP PER of 9.94x is 40.1% below the industry average of 16.60x.

However, its predicted EV/S of 2.06x is 2.9% higher than the industry average of 2.01x, and its predicted P/S of 1.30x is 2.4% higher than the industry average of 1.27x.

Solid profitability margins

CMCSA's trailing 12-month gross profit margin of 67.34% is 33.3% higher than the industry average of 50.52%. Its 12-month EBITDA margin of 29.82% is 54.4% higher than the industry average of 19.31%, while its 12-month net profit margin of 11.54% is 98.9% higher % to the industry average of 5.80%.

In addition, its ROCE, ROTC and ROTA over the last 12 months are 15.06%, 7.07% and 5.26%, compared to industry averages of 6.66%, 3.58% and 2.48%, respectively.

POWR ratings reflect promising outlook

CMCSA has an overall rating of B, which is equivalent to Buy in our proprietary POWR rating system. POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

It has a B rating for quality, which is consistent with its industry leading profit margins.

The stock has a C rating for Value, in line with its mixed valuation multiples.

In the entertainment industry - 9-share TV and Internet providers, CMCSA is ranked first.

Click here for additional POWR ratings for CMCSA (Growth, Momentum, Stability, and Sentiment).

Check out all the top entertainment stocks – TV and Internet here.

Conclusion

The company has seen steady growth in the last quarter. Additionally, CMCSA's revenue and EPS are expected to grow 4.6% and 11.1% year-over-year to $121.72 billion and $3.59 billion in 2022, respectively. Given its strong fundamentals and significant upside potential, I think CMCSA could be an ideal addition to your portfolio right now.

CMCSA shares were trading at $35.13 per share on Tuesday morning, down $0.63 (-1.76%). Year-to-date, the CMCSA is down -28.98%, compared to a -16.64% rise in the benchmark S&P 500 over the same period.