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Comcast Corp. (CMCSA) is slated to release its first quarter 2012 results on Wednesday, May 2, 2012, before the opening bell. The current Zacks Consensus Estimate for the first quarter is pegged at 43 cents per share, representing annualized growth of 18.13%.

With respect to earnings surprises over the trailing four quarters, Comcast has outperformed the Zacks Consensus Estimate in three of the last four quarters. The average earnings surprise was 0.68%.

Fourth Quarter Recap

On February 15, 2012, Comcast reported its fourth quarter 2011 financial results. GAAP net income for the fourth quarter of 2011 was $1,287 million or 47 cents per share compared with a net income of $1,018 million or 36 cents per share in the prior-year quarter. However, quarterly EPS of 47 cents was ahead of the Zacks Consensus Estimate of 43 cents.

The fourth-quarter 2011 total revenue came in at $15,042 million, up 54.7 % year over year, and well above the Zacks Consensus Estimate of $14,809 million. Operating margin in the fourth quarter of 2011 was 19.4% compared with 20.7% in the prior-year quarter.

Agreement of Estimate Revisions

In the last 30 days, out of the 19 analysts covering the stock, two analysts increased the EPS estimate for the first quarter of 2012 while two reduced. Similarly, for the second quarter of fiscal 2012, out of the 18 analysts covering the stock, three analysts revised the estimate upwards while one analyst came down.

For fiscal 2012, in the last 30 days, out of the 21 analysts covering the stock, five analysts raised the EPS estimate but one reduced. Likewise, for fiscal 2013, out of the 19 analysts covering the stock, five analysts increased the EPS estimates while only one moved in the opposite direction.

Magnitude of Estimate Revisions

During the last 30 days, the current Zacks Consensus Estimate was just a penny above the previous estimate of 42 cents for the first quarter of 2012, while for the second quarter of 2012 the current Zacks Consensus Estimate wasjust a penny above the previous estimate of 42 cents.

Likewise, for fiscal 2012, the current Zacks Consensus Estimate was 2 cents above the previous estimate of $1.86. Similarly, for fiscal 2013, the current Zacks Consensus Estimate was 2 cents above the previous estimate of $2.19.

Earnings Surprises

The current Zacks Consensus Estimate for the ongoing quarter contains a 2.33% downside potential but the same for the second quarter of fiscal 2012 reflects a 2.04% upside potential (essentially a proxy for future earnings surprises). However, fiscal 2012 has the Zacks Consensus Estimate downside risk of 1.06% but the growth potential is 1.36%.

Our Recommendation

Comcast is becoming a media powerhouse armed with its unique control over both content and distribution after completing the acquisition of a controlling stake in NBC Universal. The company is also aggressively deploying the DOCSIS 3.0 (also called Wideband) technology to upgrade its existing customers to high-speed network together with all digital networks.

However, we believe that Comcast is fairly valued at current levels as the stock price has moved up by a whopping 56% last year. Moreover, stiff competition from formidable rivals like Time Warner Cable (TWC) and other satellite operators like DIRECTV (DTV) and DISH Network Corporation (DISH) will most likely make the market highly competitive.

We maintain our long-term Neutral recommendation on Comcast. Currently, Comcast has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

 
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