Comcast’s stock price has taken a beating over the past six months, shedding 21.9% of its value and falling to $21.60 per share. This may have investors wondering how to approach the situation.
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Why Do We Think Comcast Will Underperform?
Even though the stock has become cheaper, we’re passing on Comcast for now. Here are three reasons we avoid CMCSA, plus one 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 28.49 million in the latest quarter, and over the last two years, averaged 4.5% 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
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Over the next year, analysts predict Comcast’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 13.8% for the last 12 months will decrease to 10.8%.
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
Over the last few years, Comcast’s ROIC averaged 2.1 percentage point decreases each year. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.
Final Judgment
We see the value of companies helping consumers, but in the case of Comcast, we’re out. Following the recent decline, the stock trades at 6.2× forward P/E (or $21.60 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. We’d suggest looking at one of our all-time favorite software stocks.
Stocks We Would Buy Instead of Comcast
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Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.