Stock Analysis on Net

Comcast Corp. (NASDAQ:CMCSA)

Dividend Discount Model (DDM) 

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. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.


Intrinsic Stock Value (Valuation Summary)

Comcast Corp., dividends per share (DPS) forecast

US$

Microsoft Excel
Year Value DPSt or Terminal value (TVt) Calculation Present value at 14.05%
0 DPS01 1.14
1 DPS1 1.23 = 1.14 × (1 + 7.58%) 1.08
2 DPS2 1.33 = 1.23 × (1 + 8.40%) 1.02
3 DPS3 1.45 = 1.33 × (1 + 9.21%) 0.98
4 DPS4 1.60 = 1.45 × (1 + 10.03%) 0.94
5 DPS5 1.77 = 1.60 × (1 + 10.85%) 0.92
5 Terminal value (TV5) 61.41 = 1.77 × (1 + 10.85%) ÷ (14.05%10.85%) 31.83
Intrinsic value of Comcast Corp. common stock (per share) $36.76
Current share price $39.53

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

1 DPS0 = Sum of the last year dividends per share of Comcast Corp. common stock. 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.


Required Rate of Return (r)

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.48%
Expected rate of return on market portfolio2 E(RM) 13.84%
Systematic risk of Comcast Corp. common stock βCMCSA 1.02
 
Required rate of return on Comcast Corp. common stock3 rCMCSA 14.05%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rCMCSA = RF + βCMCSA [E(RM) – RF]
= 4.48% + 1.02 [13.84%4.48%]
= 14.05%


Dividend Growth Rate (g)

Dividend 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)
Dividends declared 4,795 4,757 4,613 4,250 3,860
Net income attributable to Comcast Corporation 15,388 5,370 14,159 10,534 13,057
Revenue 121,572 121,427 116,385 103,564 108,942
Total assets 264,811 257,275 275,905 273,869 263,414
Total Comcast Corporation shareholders’ equity 82,703 80,943 96,092 90,323 82,726
Financial Ratios
Retention rate1 0.69 0.11 0.67 0.60 0.70
Profit margin2 12.66% 4.42% 12.17% 10.17% 11.99%
Asset turnover3 0.46 0.47 0.42 0.38 0.41
Financial leverage4 3.20 3.18 2.87 3.03 3.18
Averages
Retention rate 0.56
Profit margin 10.28%
Asset turnover 0.43
Financial leverage 3.09
 
Dividend growth rate (g)5 7.58%

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).

2023 Calculations

1 Retention rate = (Net income attributable to Comcast Corporation – Dividends declared) ÷ Net income attributable to Comcast Corporation
= (15,3884,795) ÷ 15,388
= 0.69

2 Profit margin = 100 × Net income attributable to Comcast Corporation ÷ Revenue
= 100 × 15,388 ÷ 121,572
= 12.66%

3 Asset turnover = Revenue ÷ Total assets
= 121,572 ÷ 264,811
= 0.46

4 Financial leverage = Total assets ÷ Total Comcast Corporation shareholders’ equity
= 264,811 ÷ 82,703
= 3.20

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.56 × 10.28% × 0.43 × 3.09
= 7.58%


Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × rD0) ÷ (P0 + D0)
= 100 × ($39.53 × 14.05%$1.14) ÷ ($39.53 + $1.14)
= 10.85%

where:
P0 = current price of share of Comcast Corp. common stock
D0 = the last year dividends per share of Comcast Corp. common stock
r = required rate of return on Comcast Corp. common stock


Dividend growth rate (g) forecast

Comcast Corp., H-model

Microsoft Excel
Year Value gt
1 g1 7.58%
2 g2 8.40%
3 g3 9.21%
4 g4 10.03%
5 and thereafter g5 10.85%

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

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= 7.58% + (10.85%7.58%) × (2 – 1) ÷ (5 – 1)
= 8.40%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 7.58% + (10.85%7.58%) × (3 – 1) ÷ (5 – 1)
= 9.21%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 7.58% + (10.85%7.58%) × (4 – 1) ÷ (5 – 1)
= 10.03%