Comcast shares went up on Thursday after the company beat Wall Street’s earnings and revenue forecasts, although its main broadband business kept losing subscribers.
The stock rose 3.3% before the market opened, while overall index futures fell because of new worries about inflation linked to higher oil prices.
Comcast said its adjusted earnings for the second quarter were $1.04 per share, beating the 97 cents analysts expected, according to FactSet. Revenue dropped 1.2% from last year to $29.9 billion, still above the $29.2 billion estimate. The company lost 167,000 home broadband customers, a bit more than Wall Street predicted.
The big box-office opening for The Odyssey and Comcast’s plan to spin off NBCUniversal have put the spotlight on its media business. Still, Thursday’s results showed that investors care most about the company’s main operations. A few weeks ago, Comcast said it would separate NBCUniversal and Sky into a new media company, keeping its broadband, wireless, and tech businesses. Investors hope this move, expected in about a year, will boost the value of a stock that is one of the cheapest in the S&P 500.
Comcast shares have dropped almost 30% in the past year, mainly because of tough competition from companies like Verizon, AT&T, T-Mobile, and SpaceX’s satellite internet. The planned split is seen as a way to help Comcast compete better in the future.
Still, Comcast’s broadband, wireless, and tech business is at the heart of what the company does and is its main source of free cash flow. That’s why investors keep a close eye on it, no matter how well NBCUniversal does at the box office. Analysts had expected about 165,300 net broadband customer losses in the U.S. for the quarter, a number that has become a main focus in recent earnings reports.
Before the results, Wall Street expected a tough quarter, with sales likely to drop 3.6% to around $29.3 billion and earnings per share down almost 18% to 97 cents. These low expectations may have made it easier for Comcast to beat forecasts, especially as opinions on the stock seem to be getting better.
