Stock Analysis on Net
Stock Analysis on Net

Comcast Corp. (NASDAQ:CMCSA)

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Comcast Corp., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 9.59%
01 FCFF0 15,699
1 FCFF1 16,363 = 15,699 × (1 + 4.23%) 14,930
2 FCFF2 17,003 = 16,363 × (1 + 3.91%) 14,156
3 FCFF3 17,614 = 17,003 × (1 + 3.59%) 13,381
4 FCFF4 18,190 = 17,614 × (1 + 3.27%) 12,610
5 FCFF5 18,728 = 18,190 × (1 + 2.96%) 11,846
5 Terminal value (TV5) 290,533 = 18,728 × (1 + 2.96%) ÷ (9.59% – 2.96%) 183,773
Intrinsic value of Comcast Corp. capital 250,698
Less: Long-term debt, including current portion (fair value) 92,200
Intrinsic value of Comcast Corp. common stock 158,498
 
Intrinsic value of Comcast Corp. common stock (per share) $40.40
Current share price $38.57

Based on: 10-K (reporting date: 2023-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Comcast Corp., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 151,334 0.62 13.71%
Long-term debt, including current portion (fair value) 92,200 0.38 2.83% = 4.00% × (1 – 29.25%)

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 3,923,626,048 × $38.57
= $151,334,256,671.36

   Long-term debt, including current portion (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (26.23% + 46.95% + 27.54% + 23.92% + 21.61%) ÷ 5
= 29.25%

WACC = 9.59%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Comcast Corp., PRAT model

Microsoft Excel
Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Interest expense 4,087 3,896 4,281 4,588 4,567
Net income attributable to Comcast Corporation 15,388 5,370 14,159 10,534 13,057
 
Effective income tax rate (EITR)1 26.23% 46.95% 27.54% 23.92% 21.61%
 
Interest expense, after tax2 3,015 2,067 3,102 3,491 3,580
Add: Dividends declared 4,795 4,757 4,613 4,250 3,860
Interest expense (after tax) and dividends 7,810 6,824 7,715 7,741 7,440
 
EBIT(1 – EITR)3 18,403 7,437 17,261 14,025 16,637
 
Current portion of long-term debt 2,069 1,743 2,132 3,146 4,452
Long-term debt, less current portion 95,021 93,068 92,718 100,614 97,765
Total Comcast Corporation shareholders’ equity 82,703 80,943 96,092 90,323 82,726
Total capital 179,793 175,754 190,942 194,083 184,943
Financial Ratios
Retention rate (RR)4 0.58 0.08 0.55 0.45 0.55
Return on invested capital (ROIC)5 10.24% 4.23% 9.04% 7.23% 9.00%
Averages
RR 0.53
ROIC 7.95%
 
FCFF growth rate (g)6 4.23%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 See details »

2023 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 4,087 × (1 – 26.23%)
= 3,015

3 EBIT(1 – EITR) = Net income attributable to Comcast Corporation + Interest expense, after tax
= 15,388 + 3,015
= 18,403

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [18,403 – 7,810] ÷ 18,403
= 0.58

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 18,403 ÷ 179,793
= 10.24%

6 g = RR × ROIC
= 0.53 × 7.95%
= 4.23%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (243,534 × 9.59% – 15,699) ÷ (243,534 + 15,699)
= 2.96%

where:

Total capital, fair value0 = current fair value of Comcast Corp. debt and equity (US$ in millions)
FCFF0 = the last year Comcast Corp. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Comcast Corp. capital

FCFF growth rate (g) forecast

Comcast Corp., H-model

Microsoft Excel
Year Value gt
1 g1 4.23%
2 g2 3.91%
3 g3 3.59%
4 g4 3.27%
5 and thereafter g5 2.96%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 4.23% + (2.96% – 4.23%) × (2 – 1) ÷ (5 – 1)
= 3.91%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 4.23% + (2.96% – 4.23%) × (3 – 1) ÷ (5 – 1)
= 3.59%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 4.23% + (2.96% – 4.23%) × (4 – 1) ÷ (5 – 1)
= 3.27%