QPD In Action – 2Q24

QPD In Action – 2Q24

This quarter we feature a business connecting millions of homes while shaping the future of entertainment and technology.

Comcast (CMCSA)

Comcast is the #1 internet provider in the U.S. (32M households), a durable position that we expect them to remain in as consumer demand for high-speed internet continues to grow.

Key Facts

  • Company also has #1 or #2 position in largely oligopolistic industries (internet, film, television, theme parks).
  • Comcast has multiple positive catalysts heading into 2025 (NBA, film slate, Peacock pricing/budget, capital allocation/buybacks). Appx. 75% of the business is insulated from recessionary pressures (highly resilient in 2008/09 period).
  • Earnings-to-cash-flow conversion rate of nearly 100% and valuation in excess of a 50% discount to the S&P 500 Index (~9x P/E vs SPX at ~22x P/E). Best-in-class balance sheet and leverage profile.
  • Noise around “new” (streaming) and “old” (wireless) competition provided an attractive entry point into this highly valuable, wide moat business.

 

QUALITY

PRICE

DISCIPLINE
  • Dominant market share across diversified end-markets and geographies.
  • Strong balance sheet and FCF generation.
  • Best-in-class leverage/debt profile (~2.0x).
  • At time of purchase, the stock was trading below average, and near multi-year low, P/E valuation.
  • Stock traded at near 50% discount to broader S&P 500 index, which we believe is unmerited given revenue/profit growth algorithm, balance sheet, market structure, and near-term catalysts.

 
  • Competition headwind from streaming (Netflix, Apple, Amazon) and fiber (AT&T, Verizon, T-Mobile) pushed valuation near multi-year lows, allowing for an attractive entry point
  • Longstanding CEO Brian Roberts has a track record of thoughtful investment and value accretion.

 

SECURITY FOUND IN FOLLOWING PORTFOLIO(s): Large Cap Value, Opportunity Fund, & Global Equity
SPONSORING ANALYST: Adam Ballantyne

 

 

Disclosures

Certain information contained in this communication constitutes “forward-looking statements”, which are based on Cambiar’s beliefs, as well as certain assumptions concerning future events, using information currently available to Cambiar.  Due to market risk and uncertainties, actual events, results or performance may differ materially from that reflected or contemplated in such forward-looking statements. The information provided is not intended to be, and should not be construed as, investment, legal or tax advice.  Nothing contained herein should be construed as a recommendation or endorsement to buy or sell any security, investment or portfolio allocation.  Securities highlighted or discussed have been selected to illustrate Cambiar’s investment approach and/or market outlook and are not intended to represent the performance or be an indicator for how the accounts have performed or may perform in the future. The portfolios are actively managed and securities discussed may or may not be held in client portfolios at any given time.

Any characteristics included are for illustrative purposes and accordingly, no assumptions or comparisons should be made based upon these ratios. Statistics/charts may be based upon third-party sources that are deemed to be reliable; however, Cambiar does not guarantee its accuracy or completeness.  Past performance is no indication of future results.  All material is provided for informational purposes only, and there is no guarantee that the opinions expressed herein will be valid beyond the date of this communication.

Source: Cambiar Analysis & Comcast company disclosure