Comcast (NASDAQ:CMCSA) is not precisely a beloved firm amongst shoppers, however it’s doing simply nice. Excessive-speed web is a staple, and migration to raised internet service has picked up in earnest throughout the pandemic this 12 months. That has helped bridge what would in any other case have been a catastrophe for the media empire — and made this a stable dividend inventory nonetheless price proudly owning.

A merciless, merciless summer season

The summer season months are an essential stretch for media corporations, and Comcast particularly was poised to have an particularly busy one this 12 months. However with its theme parks principally idled, the Summer time Olympics and different sporting occasions postponed, and new function movie releases pushed again on the calendar, Comcast had something however a banner third quarter in 2020. Income fell 5% 12 months over 12 months to $25.5 billion, and adjusted EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) fell 11% to $7.6 billion.

Picture supply: Getty Pictures.

However internet high-speed web subscription additions of 663,000 within the quarter (for a grand whole of 30.1 million on the finish of Q3) propped up the massive cable communications phase. Cable and broadcast TV energy additionally helped NBC Common’s outcomes, and 22 million sign-ups for the streaming service Peacock helped mitigate the 273,000 internet subscriber losses in cable TV (Comcast ended Q3 with 20.1 million TV prospects). Throughout the pond, Sky was up barely on the highest line however turned in decrease profitability as a result of excessive bills as sporting occasions resumed after the lockdown earlier within the 12 months.

Metric

Three Months Ended

Sept. 30, 2020

Three Months Ended

Sept. 30, 2019

Change

Cable Communications

Income

$15.zero billion

$14.6 billion

3%

Adjusted EBITDA

$6.41 billion

$5.80 billion

11%

NBCUniversal

Income

$6.72 billion

$8.30 billion

(19%)

Adjusted EBITDA

$1.29 billion

$2.09 billion

(39%)

Sky

Income

$4.79 billion

$4.55 billion

5%

Adjusted EBITDA

$515 million

$899 million

(45%)

EBITDA = earnings earlier than tax, curiosity, depreciation, and amortization. Knowledge supply: Comcast.

On a consolidated foundation, Comcast’s income and adjusted EBITDA are down 6% and 9% respectively by means of the primary 9 months of 2020. The theme has been constant since March: Excessive-speed web additions are offsetting a blended bag at greatest all over the place else. The excellent news, although, is that web service is a high-profit concern. In consequence, even in a less-than-perfect 12 months, free money stream (income much less money working bills and capital expenditures) is up 6% 12 months over 12 months by means of the primary three quarters to $11.6 billion.

Sluggish and regular wins the day

The free money stream profile is essential because it helps Comcast’s dividend, presently yielding 2.1%. The quarterly payout to shareholders has solely price Comcast $3.09 billion this 12 months. Thus, free money technology handily helps the investor payday and has loads of room to develop within the years forward.

Apart from, the final two quarters might mark a low level for the corporate. Administration stated on the earnings name that its theme parks might return to breakeven on the underside line in 2021, and theatrical releases ought to resume as effectively. And whereas Peacock’s 22 million subscribers are far behind the some 38 million U.S. subscribers AT&T‘s HBO and HBO Max have — not to mention the far larger streaming depend at Disney and Netflix — Roku‘s current addition of Peacock to its platform might assist pace up the variety of customers and ensuing promoting gross sales.

Additionally promising is that Comcast has truly strengthened its steadiness sheet this 12 months. Whole money and equivalents had been $13.7 billion on the finish of September (versus $5.50 billion at first of 2020) and whole debt was $104 billion (versus $102 billion at the start of the 12 months). Not many mega-corporations can boast comparable will increase in internet money steadiness after eight months of pandemic disruption.

Comcast is much from good, and it is not producing rave leads to its next-gen leisure providers like a few of its friends. Nonetheless, I believe it is a stable dividend inventory price proudly owning, thanks in no small half to the extremely worthwhile and rising high-speed web phase. And at simply 14 instances trailing 12-month free money stream, it may very well be an actual cut price if enterprise general begins to rebound in 2021.