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) provides pay-TV services in the United States. The company operates in two segments, Pay-TV and Wireless. It offers video services under the DISH TV brand.
The entertainment providers are in high demand due to the rising trend of watching videos and series online and increasing disposable income. Moreover, the advancements in television technology and growing internet penetration across the globe are expected to drive the entertainment industry's growth. According to a report by Market Reports World, the global entertainment and media market is expected to grow at a CAGR of 5.9% during 2022-2028. Therefore, both CMCSA and DISH should benefit.
DISH has gained 2.3% over the past three months versus CMCSA’s negative returns.
But which of these two stocks is a better buy now? Let’s find out.
Latest Developments
On January 27, 2022, CMCSA announced that it increased its dividend by $0.08 to $1.08 per share on an annualized basis, up 8% year-over-year. Following the increase, the Board of Directors declared a quarterly cash dividend of $0.27 a share on the company’s common stock, payable on April 27, 2022, to shareholders of record as of the close of business on April 6, 2022.
On February 23, 2022, DISH announced using the ServiceNow (NOW) Platform to standardize network and service operations on America’s first Smart Network. Jeff McSchooler, EVP, Wireless Network Operations, DISH, said, "Not only will this partnership streamline our network operations, but it also provides a long-term opportunity to help us deepen our services and offerings, delivering better network experiences over our SMART 5G™ Network."
Recent Financial Results
CMCSA’s revenue increased 9.5% year-over-year to $30.34 billion for the fiscal fourth quarter ended December 31, 2021. The company’s adjusted net income grew 35.1% year-over-year to $3.53 billion. Also, its adjusted EPS came in at $0.77, up 37.5% year-over-year.
DISH’s revenues decreased 2.4% year-over-year to $4.45 billion for the fiscal fourth quarter ended December 31, 2021. The company’s net income declined 24.7% year-over-year to $552 million. Also, its EPS came in at $0.87, down 29.8% year-over-year.
Past and Expected Financial Performance
CMCSA’s revenue and EPS grew at CAGRs of 7.2% and 6.3%, respectively, over the past three years. Analysts expect CMCSA’s revenue to increase 14% for the quarter ending March 31, 2022, and 5.4% in fiscal 2022. The company’s EPS is expected to grow 5.3% for the quarter ending March 31, 2022, and 9.6% in fiscal 2022. Moreover, its EPS is expected to grow at a rate of 11.9% per annum over the next five years.
On the other hand, DISH’s revenue and EPS grew at CAGRs of 9.5% and 8.1%, respectively, over the past three years. The company’s revenue is expected to increase 0.3% for the quarter ending March 31, 2022, but decrease 4% in fiscal 2022. Its EPS is expected to decline 22.2% for the quarter ending March 31, 2022, and 26.1% in fiscal 2022. Also, DISH’s EPS is expected to decrease at a rate of 26.6% per annum over the next five years.
Profitability
CMCSA’s trailing-12-month revenue is 6.50 times what DISH generates. CMCSA is also more profitable with a gross profit margin and EBITDA margin of 66.96% and 29.75% compared to DISH’s 34.35% and 21.97%, respectively
Furthermore, CMCSA’s ROA and ROTC of 4.73% and 6.32% are higher than DISH’s 4.64% and 5.82%, respectively.
Valuation
In terms of forward non-GAAP P/E, CMCSA is currently trading at 13.13x, 24.7% higher than DISH’s 10.53x. However, DISH’s forward EV/EBITDA ratio of 10.12x is 20.3% higher than CMCSA’s 8.41x.
POWR Ratings
CMCSA has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. On the other hand, DISH has an overall rating of D, which translates to a Sell. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
CMCSA has a B grade for Stability, in sync with its beta of 0.92. In comparison, DISH has a C grade for Stability, consistent with its beta of 2.04.
Moreover, CMCSA has a grade of B for Quality. This is justified given CMCSA's 66.96% trailing-12-month gross profit margin, 30.9% higher than the industry average of 51.16%. On the other hand, DISH has a Quality grade of D, in sync with its 34.35% trailing-12-month gross profit margin, 32.9% lower than the industry average of 51.16%.
Of the nine stocks in the Entertainment - TV & Internet Providers industry, CMCSA is ranked first. In comparison, DISH is ranked last.
Beyond what I’ve stated above, we have also rated the stocks for Growth, Value, Momentum, and Sentiment. Click here to view all the CMCSA Ratings. Also, get all the DISH ratings here.
The Winner
Since the entertainment industry is expected to grow exponentially, both CMCSA and DISH should benefit. However, it is better to bet on CMCSA now because of its robust financials, higher profit margin, and better growth prospects.
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 other top-rated stocks in the Entertainment - TV & Internet Providers industry here.
CMCSA shares were trading at $46.63 per share on Wednesday afternoon, up $0.24 (+0.52%). Year-to-date, CMCSA has declined -6.89%, versus a -7.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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