r/valueinvesting
Comcast the provider we all hate but have used
Comcast trades at a deep discount due to broadband losses, but slowing churn, huge buybacks, and strong FCF offer a clear re-rating path.
- Slowing broadband subscriber losses indicate the core business decline is stabilizing rather than accelerating.
- Aggressive capital allocation with $6.8B annual buybacks and debt reduction mechanically drives EPS growth.
- Hidden value in non-broadband assets like theme parks, wireless growth, and Peacock, plus a 5.6% dividend yield.
- Core broadband business faces real, structural, and ongoing subscriber losses to fiber competitors.
- Massive $99B debt load poses significant balance sheet risks in a challenging macro environment.
- Poor corporate governance due to the Roberts family's control via a dual-class share structure.
Comcast (CMCSA) — Investment Thesis
Comcast is one of the most cash generative businesses in America, producing $19.2B in free cash flow annually yet trading at just 4.4x earnings — a historically extreme discount driven by fear of its $99B debt load and broadband subscriber losses to fiber competition.
The core business is in decline. Broadband subscribers are being lost to fiber competitors like AT&T and Google Fiber as they build out street by street across Comcast’s footprint. This is real, structural and ongoing. The market is right to reprice the stock from its historical 13-15x multiple.
However the market has overshot. Early signs of improvement are emerging. Q1 2026 broadband losses narrowed dramatically to just 65,000 from 183,000 a year earlier — the best trend in years. The bleeding is slowing, not accelerating.
Meanwhile management is executing a clear capital allocation playbook. They retired $4.1B of near term debt today alone while simultaneously buying back $6.8B in shares annually. This dual strategy reduces the balance sheet risk the market fears while mechanically growing EPS through share count reduction. At current buyback pace EPS grows from $5.37 to approximately $6.28 by December 2028 requiring zero business improvement.
The market currently prices Comcast as a business in freefall. The reality is a managed, slow decline with $19.2B in annual FCF, $60-70B of theme park assets growing at 20%+ annually, a wireless business adding 400,000+ lines per quarter, Peacock approaching profitability, and a dividend yielding 5.6% — all available at 4.4x earnings.
The re-rating doesn’t require anything heroic. Simply the market recognizing the decline is slowing rather than accelerating — moving from 4.4x to 5.5-6x — combined with buyback driven EPS growth gets the stock to $33 in 2 years.
Key Risks
- Corporate Governance — Roberts Family Control
Brian Roberts controls approximately 33% of Comcast through a dual-class share structure giving him effective veto power over all major decisions. His track record includes large ambitious acquisitions at premium prices — Sky for $39B, NBCUniversal for $30B — funded with significant debt. With no meaningful check on his authority, capital earmarked for buybacks and debt reduction could be redirected into another major acquisition at precisely the wrong time. Minority shareholders have no practical recourse.
- Broadband Decline Outpacing Growth
Broadband generates 85-90% of Comcast’s free cash flow and is structurally declining as fiber competitors build across its footprint. While theme parks, wireless and Peacock are growing encouragingly, they remain far too small to offset serious broadband deterioration. Parks generate $3B EBITDA versus broadband’s $14B+. Wireless revenue per line is a fraction of broadband. Peacock is still approaching profitability. The growth segments would need to nearly triple before meaningfully compensating for broadband losses. Until that gap closes the financial trajectory depends almost entirely on how fast fiber erodes the core business.
I like charter but I see the value of cmcsa. They are at least diversified with theme parks too.
Both companies are stagnant and will mostly stay stagnant. That doesn't mean I think they're bad investments, mo once upon was great at 40 dollars.
Cmcsa pays a dividend and buys shares, and frankly has a healthier debt load. Charter is now up to 25 percent buyback yield at such a crazy price. In 4 years I'll be the last shareholder and get a flat 10 billion fcf a year haha.
But kudos to being open to companies that aren't Googles or Nvidias, they are stagnant, but produce a f ton of cash, and still be good for shareholders.
Hello fellow CHTR holder. I just bought my first shares this week, cost basis of $135. The buybacks are really what made me choose it over CMCSA as well, although both are trading at fire sale valuations. I consider it a classic cigar butt stock. Their FCF would have to deteriorate massively for their debt load to be an issue, and while I'd like to see it lower, I can't argue that they should reduce their buybacks to pay down more debt when they can just buy a quarter of the company back every year.
It's absolutely a mediocre, declining business, but it's worth about double its current value to me. I'll take that risk on a business that is still gushing cash, and I don't think they're on pace to lose that cash flow nearly as fast as the market is pricing in.
Thank you Charter is another interesting one. I’m not as confident in it from what I’ve seen bit maybe it deserves another look.
You nailed the thesis though this isn’t a hyper growth play or even a moderate growth play. This is a buy-at-a-discount-to-value play. The free cash flow does the heavy lifting, the buybacks shrink the share count, and over time the business essentially becomes yours.
The other fact that is compelling about Comcast is the IPA they hold is top tier by its self worth billions.
My main thesis is buybacks... Pypl is another one on pace to retire 15 percent a year. Cmcsa did 5 percent last year, not bad... But I'm expecting 7 percent from charter... This quarter... 20 to 25 for the year.. I've never seen anything like it.
Again.. cmcsa a bit more diversified.. other assets.. and what 5 percent divvy? I'm only investing because I don't believe in too much diversification and have others I like more. But cmcsa is refreshing to see as a pitch on this forum.
The main counter argument I’ve heard (for old broadband providers) is the cost for AT&T/Google to lay out the fiber. Wonder if there’s any new technology to do it cheaper now (especially at high wage now vs previously.
There is. Google is doing microwave links in my city where fiber installation is too costly. It lets them do an end run and disrupt the economics of utility pole leasing. We got it for our building and I get consistent 1Gbs symmetrical.
The re-rating doesn’t require anything heroic. Simply the market recognizing the decline is slowing rather than accelerating — moving from 4.4x to 5.5-6x — combined with buyback driven EPS growth gets the stock to $33 in 2 years.
TTM p/e is around 6-7 after you back out the hulu sale. fwd p/e is more accurate.
you also understate a few risks:
- they are facing margin pressures by bundling free mobile with their internet to stem bleeding, with the idea that those users should convert to paying mobile customers and their margin will expand once they do. no idea if this will actually happen, but they also don't own the cell towers, they are bundling. they are a re-seller, and from what i hear their customers are second class citizens on that tower, never used myself so not sure if true.
- peacock is an inferior streaming service with no promise of recurring profitability. mgmt just side-stepped this question when asked during earning calls. they have also stated that it will stay a purely domestic service because they don't want to lower ARPU. the other risk with peacock and all of universal frankly is that they have no strong cultural flywheel for their IP besides minions that drags users back to their platform or parks. they don't own a lot of IP they use for their parks like harry potter or nintendo (again, lack of cultural IP for a platform flywheel because they don't have good a universal lore IP besides minions), which is why they placed a bid for WBD when they were selling the business.
that said, i do have a small position in cmcsa because i think risk outweighs reward here.
At this price it could be worth opening a position. As you say it won’t take much for it to rerate when it’s this low. The dividend pays you to wait.
Of course microwave is not going to work everywhere but it works excellent in high density areas which have a huge number of potential users. We have had zero issues with rain fade so far. The only real issue is if you get a lot of snow you need to clean the dish and right now they literally send a guy out to do this manually. I talked to the guys and they are trialing dish heaters to automate this.
For other areas you still have Starlink, direct to home 5G and residential fiber which costs far less to run in suburban areas.
The other thing you should consider is that comcast has fiber already. What limits them is that the last mile is still coax and that limits their bandwidth while also requiring far more work to maintain.
Comcast's moat is the cable experience with running channels as opposed to streaming or at best streaming made to look like the cable experience. For young people this moat does not exist because that's not how young people consume media. So what is really left is older millennials, Gen X and the remaining boomers. and even these groups are slowly making the switch.
I looked at comcast a few times now and I always come to the same conclusion. Its tempting for the reasons you outlined but its ultimately a value trap. They are too big to reinvent themselves for this modern age of broadband/media consumption.
Good point there’s a chance it’s a melting ice cube, but we’re not seeing that yet. The core business is still printing money and generating enormous free cash flow, and while it is melting, it’s not melting nearly as fast as price is implying. The bleeding is also slowing Comcast is bundling broadband with mobile through Xfinity Mobile and locking in longer term contracts, increasing switching friction across multiple services.
The bigger near-term threat is fiber, not satellite. AT&T and Frontier are making real inroads in core markets. Fixed wireless is growing too, but has a structural ceiling the more users on a cell the worse it gets, so it can’t realistically scale in dense suburban markets. Starlink is closing the gap faster than many expected, but it’s still primarily a rural solution and hasn’t reached the scale needed to disrupt Comcast’s core markets.
At the right valuation, the free cash flow alone makes this an interesting situation despite the headwinds
Funny I been buying CMCSA for a bit now and wondered if I was Nuts. I’m not nuts. Thanks for the frankly unneeded validation. Analysis says buy with both hands imho. Only wildcard is star link imo.
Could just be we’re both nuts
350 shares in Comcast plan to buy 50-100 shares whenever trading day it drops. Will either build to 500 vs 1000, in my account of 350k. Charter has too much debt that’s going to mature. We are using Comcast and we are happy w their service for the last 4 years. I do think it is a cigarette butts however it has its potential more than end of life.
I am also waiting for a deeper discount for google. I did miss the buying opportunity of Microsoft’s dip last time. I might dump 40k into google if it’s price falls under what Greg Abel paid.
i know universal has great IP. besides minions (which is still a rung or two below the best), they just don't have any mythical cultural IP where you can extract stans over their lifetime, and a lot of roi from parks are built on the stan extraction ecosystem that universal just buy licensing rights for. universal park's most popular attraction is harry potter... which they don't own.
while it's unlikely wbd pulls the deal come renewal, it is still a risk. especially as they spend more capex on parks, if the deal is pulled, they're gonna need to spend even more capex renovating the park while losing revenue from their main attraction being pulled.
why do they do buybacks instead of paying off debt?