During mixed trading across the major equity indices, broadcasting stalwart Comcast (NASDAQ:CMCSA) delivered an earnings beat. Primarily, the media giant benefitted from demand in the company’s theme parks and studios unit. However, Comcast also faces pressures in improving its broadband subscriber growth trend as well as declining digital advertising sales. CMCSA stock gained 8% on Thursday morning, though it pared gains by more than half in the afternoon.
For the company’s third quarter, Comcast incurred a net loss of $4.6 billion or $1.05 per share, according to a Reuters report. In contrast, the company posted a profit of $4.04 billion, or 86 cents per share, in the year-ago period. However, excluding non-recurring items, Comcast’s earnings per share pinged at 96 cents, beating the consensus EPS target of 90 cents.
On the revenue front, the top line fell 1.5% to $29.85 billion in the quarter. Still, according to Refinitiv data, analysts projected revenue to hit $29.65 billion. Therefore, Comcast pulled off a comprehensive beat on the headline numbers, bolstering CMCSA stock.
According to the Wall Street Journal, theme-parks revenue increased 42%, likely reflecting benefits from the revenge travel phenomenon. As the Q3 report by American Express (NYSE:AXP) demonstrated, travel demand exceeded the financial service firm’s expectations. Thus, with attractive tourist hotspots undergirding CMCSA stock, the travel narrative capped off an overall positive showing.
Not Every Detail Presented Bright Lights for CMCSA Stock
Although Wall Street decisively took the optimistic route regarding CMCSA stock, the underlying company also expressed some concerns. These headwinds may impose obstacles down the line.
First, sluggish broadband subscriber growth applied pressure on the Q3 disclosure. Per Reuters:
“Comcast added 14,000 broadband customers in the quarter, compared to the hundreds of thousands it gained at the peak of the pandemic, due to competition from telecom giants that have been promoting attractive offers on wireless and internet plans to price-conscious Americans.”
Interestingly, the news agency also mentioned that Comcast “expects to take a hit to its cable networks from the damage caused by Hurricane Ian, including broadband customer losses.”
The second headwind centers on digital advertising sales pressures. According to Reuters, “Comcast’s media unit, NBCUniversal, reported a 35.1% drop in advertising sales, compared to the same quarter a year ago when it broadcast the Olympics and Super Bowl.”
As well, Comcast executives warned about cord-cutting trends and higher costs associated with broadcasting the World Cup soccer tournament. CMCSA stock finds itself down 36% on a year-to-date basis. However, in the trailing month, it’s up 7%, reflecting brewing positive near-term sentiment.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
