Comcast has gotten torched over the last six months - since May 2025, its stock price has dropped 21.7% to $27.37 per share. This may have investors wondering how to approach the situation.
Is now the time to buy Comcast, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.
Why Do We Think Comcast Will Underperform?
Even though the stock has become cheaper, we're sitting this one out for now. Here are three reasons why CMCSA doesn't excite us and a stock we'd rather own.
1. Decline in Domestic Broadband Customers Points to Weak Demand
Revenue growth can be broken down into changes in price and volume (for companies like Comcast, our preferred volume metric is domestic broadband customers). While both are important, the latter is the most critical to analyze because prices have a ceiling.
Comcast’s domestic broadband customers came in at 31.44 million in the latest quarter, and over the last two years, averaged 1.1% year-on-year declines. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Comcast might have to lower prices or invest in product improvements to grow, factors that can hinder near-term profitability. 
2. Cash Flow Margin Set to Decline
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Over the next year, analysts predict Comcast’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 14.7% for the last 12 months will decrease to 12.2%.
3. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Comcast’s ROIC averaged 3.2 percentage point increases over the last few years. This is a good sign, and we hope the company can continue improving.
Final Judgment
Comcast doesn’t pass our quality test. After the recent drawdown, the stock trades at 6.6× forward P/E (or $27.37 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now. Let us point you toward one of our top software and edge computing picks.
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