Comcast Corporation (CMCSA) operates as a media and technology company worldwide. It operates through Cable Communications; Media; Studios; Theme Parks; and Sky segments.
On the other hand, DISH Network Corporation (DISH) and its subsidiaries provide pay-TV services in the United States. The company operates in two segments, Pay-TV and Wireless.
Streaming surpassed cable TV viewership in July 2022, achieving a 34.8% share of total television consumption in the U.S. However, cable TV is still a reliable choice for many Americans. And the majority of Americans use Broadband cable connections.
According to a report by the Fiber Broadband Association, cable remains the dominant method for connecting homes to the internet. Furthermore, according to Accesswire, cable television broadcasting services are projected to grow at a CAGR of 5.4% from 2022 to 2032. Cable TV giants CMCSA and DISH are expected to benefit from the industry’s prospects.
However, CMCSA has lost 13.8% over the past month, while DISH has lost 14.6%. Moreover, CMCSA has lost 31.5% year-to-date and 38% over the past year. On the other hand, DISH has lost 47% year-to-date and 59.1% over the past year.
But which of these stocks is the better pick now? Let's find out.
Latest Developments
On September 15, 2022, CMCSA announced the completion of a $2 million fiber network expansion to serve Philadelphia’s Food Distribution Center. This investment is expected to smoothen business activities in the Philadelphia region and boost micro and small businesses.
Moreover, on September 8, 2022, CMCSA initiated a nationwide rollout of multi-gig Internet speeds. This venture aims to reach more than 50 million homes and businesses by 2025 – making it the largest- and fastest-ever multi-gig deployment in the United States. This will be a landmark achievement for the company.
On the other hand, on September 12, 2022, DISH launched a first-of-its-kind solution, National Linear Programmatic, in collaboration with Beachfront, the sell-side ad server built for convergent TV, and SeaChange International, Inc. (SEAC), a leader in video delivery.
Kevin Arrix, senior vice president, DISH Media, said, “Pioneering this new capability is another step in our effort to build more open and interoperable solutions for our advertisers.”
Recent Financial Results
CMCSA’s revenue increased 5.1% year-over-year to $30.02 billion for the second quarter ended June 30, 2022. Its operating income came in at $6.37 billion, up 15.6% year-over-year. Also, its adjusted net income came in at $4.51 billion, up 14.3% year-over-year, while its adjusted EPS came in at $1.01, up 20.2% year-over-year.
DISH’s total revenue came in at $4.21 billion for the second quarter ended June 30, 2022, down 6.2% year-over-year. Its operating income came in at $692.93 million, down 23.6% year-over-year. Moreover, its net income came in at $522.83 million, down 22.1% year-over-year. The company’s EPS decreased 22.6% year-over-year to $0.82.
Past and Expected Financial Performance
CMCSA’s revenue and EPS have increased at 5.5% CAGR each over the past three years. Its revenue is expected to increase 4.6% year-over-year in 2022 and marginally in 2023. In addition, its EPS is expected to increase 11.1% and 7.5% year-over-year in 2022 and 2023, respectively. The stock surpassed EPS estimates in each of the trailing four quarters.
DISH’s revenue and EPS have increased at 10% and 6% CAGRs, respectively, over the past three years. However, its revenue is estimated to decline 7.8% year-over-year in 2022 and increase marginally in 2023. Its EPS is expected to fall 34% year-over-year in 2022 and 48% year-over-year in 2023. The stock missed consensus EPS estimates in three of the four trailing quarters.
Profitability
CMCSA’s 67.34% gross profit margin is higher than DISH’s 33.39%. Its EBIT and EBITDA margins of 18.25% and 29.82% are higher than DISH’s 15.34% and 19.31%, respectively.
Furthermore, CMCSA’s ROE, ROA, and ROTC of 14.34%, 0.06%, and 7.07%, compare with DISH’s 13.39%, 0.04%, and 4.66%, respectively.
Thus, CMCSA is more profitable.
Valuation
In terms of forward EV/S, CMCSA’s 2.02x is higher than DISH’s 1.80x. Its forward P/E of 10.99x is higher than DISH’s 6.73x. However, CMCSA’s forward EV/EBITDA of 6.63x is 33.3% lower than DISH’s 9.94x.
POWR Ratings
CMCSA's overall B rating equates to Buy in our proprietary POWR Ratings system. On the other hand, DISH has an overall rating of D, which translates to Sell. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
CMCSA has a B grade for Quality. Its trailing-12-month gross profit margin of 67.34% is 33.3% higher than the industry average of 50.52%.
On the other hand, DISH has an F grade for Quality. Its trailing-12-month gross profit margin of 33.39% is 33.9% lower than the industry average.
In addition, CMCSA has a C grade for Growth, consistent with its sound improvement in its financials. DISH has a D grade for Growth, in sync with its declining bottom line in the last reported quarter.
Of the nine stocks in the Entertainment - TV & Internet Providers industry, CMCSA is ranked first. In contrast, DISH is ranked #8.
Beyond what we’ve stated above, we have also rated the stocks for Growth, Value, Momentum, and Sentiment. Click here to view CMCSA’s ratings. Get all DISH ratings here.
The Winner
The stable demand for cable TV and broadcasting services should bode well for cable TV giants CMCSA and DISH. However, given CMCSA’s better profit margins and stable growth, we think it could be the better stock to own.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated Entertainment – TV & Internet Providers stocks here.
CMCSA shares were trading at $34.35 per share on Friday morning, up $0.35 (+1.03%). Year-to-date, CMCSA has declined -30.56%, versus a -18.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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