Shares of cable and internet giant Comcast (CMCSA 2.81%) are on the rise this afternoon, up 2.6% through 1:10 p.m. ET after beating on earnings in the morning.
Heading into Comcast’s Q2 report, analysts forecast the company would earn $1.18 per share, adjusted for one-time items, on $29.8 billion in sales. Instead, Comcast earned $1.25 per share on sales of $30.3 billion.
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Comcast Q2 earnings
Sales inched only 2% higher year over year, and adjusted net income was up only 3% — but earnings per share as calculated according to generally accepted accounting principles (GAAP) nearly tripled to an astounding $2.98, and free cash flow more than tripled to $4.5 billion.
That alone would more than explain investors’ enthusiasm today.
Is Comcast stock a buy?
Comcast didn’t give guidance for how the rest of the year will play out, and analysts who follow the stock might be in for a surprise. According to Yahoo! Finance data, earnings are only supposed to grow a penny (year over year) in Q3, and to decline in Q4 — resulting in full-year 2025 profit declining $0.02 to $4.31 per share. Comcast’s tremendous Q2, however, just delivered nearly three-quarters of the year’s forecast profit in a single quarter, setting up Comcast to potentially thrash expectations by the end of this year.
Meanwhile, Comcast stock trades for a mere 5 times trailing earnings — which might be the right price if earnings are shrinking, but could be incredibly cheap if earnings grow like it looks like they’re going to. Even factoring Comcast’s $100 billion-plus debt load into the picture, a stock that costs 5.3x earnings, pays a 4.1% dividend, and shows any growth at all would seem cheap to me.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.