Q4 Preview: Divdend-a-Palooza for Comcast (CMCSA), But NBCU Pressure Lingers

Comcast (Nasdaq: CMCSA) is trading lower ahead of its fourth-quarter report, expected out before the market opens Wednesday.

The Street is currently modeling EPS growth of 17 percent to 41 cents on revs of $14.87 billion. Comcast has beat earnings views by an average of 3.2 percent over the last five-quarters, indicating a potential EPS of 42 cents.

Investors have concerns surrounding potential losses of customers as Verizon (NYSE: VZ) and AT&T (NYSE: T) continue rolling out Internet and TV packages nationwide. However, Comcast has been able to stem these losses with higher prices and better ability to move current customers into pricier packages.

Shares of Comcast moved 14.5 percent higher to $23.71 at the end of December. The stock is up 13.8 percent since then, and ended 2011 10.5 percent better.

Current data from Bloomberg has 24 analysts with a Buy, 5 at Hold, and 1 with a Sell. The Street's price target average is $31, with a low of $28 and high of $36. Over the last 52-weeks, Comcast has traded from a range of $19.19 to $27.52.

Analyst Comments

• Goldman Sachs is looking for EPS of 43 cents and revs of $14.94 billion. The firm commented, "CMCSA buybacks are currently at the center of the debate; relative to 2011, we see CMCSA repurchases accelerating to $3.75bn in 2012, likely the high end of what Cable FCF can support."
  
  Key risks heading into the quarter are NBCUniversal, over-the-top video risks.
  
  
• Wells Fargo sees EPS of 41 cents and revs of $15 billion. Despite the outlook, Wells says investors will be more focused on what Comcast's capital allocation plans will be during their conference call.
  
  With Comcast traditionally keeping its dividend yield near 2 percent, Wells anticipates there will be a dividend increase of 20 percent to about 54 cents per sahre. Total payout would be 26 percent of free cash flow. On stock buybacks, Wells is modeling about $3 billion to $3.5 billion.
  
  Total PSUs in the quarter will be about 280,000, with ARPU at 6.8 percent growth.
  
  For the NBCU side of the business, here's some estimates from Wells:
  • Cable nets – We nudged our revenue and OCF estimates up slightly as the NBA lockout did not totally remove games from Q4, benefiting NBCU’s 12 RSNs. (We had previously assumed an extended lockout and that there would be no games played.)
    
    
  • Broadcast nets – We lowered both our revenue and OCF estimates due to Q4 ratings (-11% in A18-49, -8% in HHs and -9% in total viewers) that were lower than what we had anticipated.
    
    
  • Theme parks – we left as-is due to lack of any true conviction here.
    
    
  • Film – We lowered our revenue and OCF estimates to account for a weaker than expected box office showing.
• Brean Murray is looking for EPS of 43 cents. Despite some integration challenges with NBCU and increasing capital intensity, Brean is still positive on the stock for its core cable business.
  
  Adds of 212 PSUs is expected. NBCU EBITDA should be $970 million with overall fourth-quarter EBITDA of $4.74 billion.
  
  
• Deutsche Bank sees revs of 14.98 billion and EPS of 41 cents. All around, Deutsche is being a realist in seeing lower cable revs and EBITDA on lighter political ad comps as well as poor NBC ratings and the delay to the NBA season.
  
  On subs, Deutsche comments, "We estimate video losses of 125k, improving from -135k in [the fourth-quarter]. For data, we estimate +275k, -6% [year-over-year], and for voice +165k, -36% [year-over-year]. We expect sub results in line-to-ahead."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Comcast's past performance at Streetinsider's Comcast's Income Statement.

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