Why You Should Exit Comcast Stock Now?

  • Comcast should be riding high but it is not.
  • Comcast stock has gone nowhere in a year and the yield is under 2%.
  • A defensive strategy indicates you might want to get out of the stock now.

Comcast -A (NASDAQ:CMCSA) should be riding high.

It has a vertical integration strategy that its media rivals lack, with NBC TV and Universal Studios feeding the Comcast cable plant, and that cable plant is better positioned to deliver fast Internet than rivals like AT&T (NYSE:T).

Yet the Comcast stock has gone nowhere over the last year, while AT&T is up 8.9%.

CMCSA stock chart

Source: Comcast stock price chart by amigobulls.com

Ratings at NBC are down. NBC has one new hit this year in Blindspot, with a 2.33 rating among adults 18-49, but its previous big hits, Grimm and The Blacklist, are falling off a cliff and may not make it into syndication. It's a double hit because 10 NBC stations in major markets are owned by the parent company. Its Hispanic affiliate, Telemundo, owns 14 more.

The cable networks are threatened by cord-cutting. Only MSNBC and SyFy rank among the top 25 channels, while only SyFy and Bravo rank among the top 25 ad-supported networks, and neither has as many as 400,000 regular viewers.

Universal’s list of 2016 movies already have a loser in Hail Caesar, and it is relying on sequels to such movies as Bridget Jones, Ride Along, and even My Big Fat Greek Wedding – the original is 14 years old. They did get Matt Damon back for a new Jason Bourne movie, early reviews on London Has Fallen look good, but if Dad’s Army and World of Warcraft fail it’s going to be a long year.

Comcast is trying to assure itself success by buying the Internet media that tells people what to watch, adding Rotten Tomatoes to a list that includes partly-owned Vox and Buzzfeed.  But it’s tough to buy credibility when your corporate reputation is bad, as Comcast’s is.

In 2016 Comcast lost its effort to buy Time Warner Cable (NYSE:TWC) over the issue of “net neutrality,” the idea that Internet users should be able to access whatever legal sites they wish, without discrimination. Since then it has mainly sought loopholes in the order, like “zero rated programs," which don’t count against data caps. It has also tried to cut into Netflix (NASDAQ:NFLX) services with data caps that limit how much users can access it.

For 2015 Comcast revenues rose about 7%, earnings barely budged, and while the new 28 cents dividend is sustainable it comes to a yield of just 2%. Operating cash flow is expanding, coming in at $19 billion for the most recent quarter, but Comcast management does not appear eager to deploy its new assets. Naturally, it blames regulators.

Comcast can limit the damage from cord-cutting because it controls the channels in its line-up, and can favor its own stuff. But it can’t buy love, and it seems that it can’t buy growth, either. Comcast stock is becoming a great stock for those who want to keep their money safe, which in a recessionary environment is not entirely a bad thing. But it is no longer a growth stock and you can get better yields elsewhere.

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Author's Disclosures & Disclaimers:
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

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