Earnings preview: Comcast bets on broadband subscription to lift Q4 earnings

Communications behemoth Comcast Corp. (CMCSA) will be announcing results for the fourth quarter Wednesday before the opening bell. The recent trend indicates there is a high chance of earnings beating the estimates, provided there is strong subscription growth in the company’s over-the-top platforms.

Analysts expect the Philadelphia-based cable giant, which owns popular television network NBC, to report a 27% growth in earnings to $0.62 per share for the December quarter. The revenue estimate is $27.57 billion, which represents a 26% increase from the year-ago quarter.

Of late, there has been a sharp increase in Comcast’s high-speed internet subscribers, which is expected to continue in the near future considering the special schemes being offered by the company, especially the broadband-only packages.

Also see: Comcast Corp Q3 2018 Earnings Conference Call Transcript

The softness in the performance of non-core segments, mainly the video streaming service, is likely to persist.  While a potential solution to the problem would be value-addition and price reduction, the growing competition in the cable TV sector limits the scope of monetizing such efforts. Unfortunately, the Theme Park business does not offer the management anything to cheer about.

The market is viewing Comcast’s entry into the wireless market with skepticism, considering the stiff competition awaits the company from biggies like Verizon (VZ), AT&T (T) and T-Mobile (TMUS). Also, cord-cutting continues to be a threat to Comcast’s growth prospects, with more video streaming subscribers switching to the internet.

Hold on to your Apple stock, this storm shall pass

In the third quarter, adjusted earnings surged 28% to $0.65 per share, far exceeding expectations. During the quarter, group revenues moved up about 5% to $21.2 billion and came in above estimates. The results benefitted from a 10% growth in high-speed internet revenues, supported by net subscriber additions of about 363,000.

Comcast shares witnessed significant volatility last year and the recovery from the multi-year lows seen mid-year lost momentum towards the end of the year. The stock, which lost about 15% in the last twelve months, closed the last trading session slightly higher.

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