Foolish Forecast: I Don't Care If Comcast Misses

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Get up bright and early on Thursday morning to be greeted by a new day, a fresh cup of hot joe, and a third-quarter report from cable giant Comcast (Nasdaq: CMCSA). Here's the lay of the land ahead of that event.

What Fools say:
Here's how Comcast's Motley Fool CAPS scoring rates against some of its peers and competitors:

	Market Cap (billions)	CAPS Rating	Bull Ratio
Comcast	$73.2	***	89%
Time Warner Cable (NYSE: TWC)	$31.9	***	93%
Shaw Communications (NYSE: SJR)	$11.5	****	92%
Cablevision Systems (NYSE: CVC)	$9.3	*	58%
Charter Communications (Nasdaq: CHTR)	$1.1	**	87%

CAPS data taken from Motley Fool CAPS on Oct. 22. Market cap data from Yahoo! Finance.

"Gotta love a solid company near its 52 week low," says one CAPS All-Star. "Comcast is not without its problems, but overall the company is a cash machine and is poised for outstanding growth over the next few years." The "cash machine" line appears in many other player pitches, along with "undervalued!" catcalls.

On the other hand, another All-Star thinks Comcast treats its customers "like a complete moron." There are concerns about hidden charges and restrictive Internet usage policies, and network upgrades only happen in areas where Verizon (NYSE: VZ) sets up shop with its FiOS alternative. The conclusion is harsh: "Slow moving company that will be beaten by competition."

What management says:
Comcast doesn't offer up the usual quarterly revenue and earnings guidance, but it does hand out a plethora of more unusual operating targets for the full fiscal year. For example, management expects to maintain at least 11% organic revenue growth through the end of the year, and hopes to add 6.5 million revenue-generating units -- cable lingo for service subscriptions -- by the end of the year. The company added 3.4 million RGUs over the first two quarters.

What management does:
Margins look relatively stable, until you reach the net income line, where the improvement is fantastic. Of course, that split-personality acquisition of some of Adelphia happened in June last year. The new networks carried lower margins on their own, but good things happen when economies of scale start to kick in.

Margins	3/2006	6/2006	9/2006	12/2006	3/2007	6/2007
Gross	64.2%	63.8%	63.8%	63.9%	63.8%	63.9%
Operating	17.3%	17.5%	18.3%	18.5%	18.2%	18.1%
Net	5.9%	5.8%	9.7%	10.1%	10.9%	10.6%
FCF/Revenue	7.7%	8.4%	9.0%	8.9%	7.0%	7.8%

Growth (YOY)	3/2006	6/2006	9/2006	12/2006	3/2007	6/2007
Revenue	2.6%	7.2%	11.8%	18.5%	25.6%	28.6%
Earnings from continuing ops	7.2%	(2.1%)	67.2%	169.9%	134.6%	147.2%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
The vaunted "triple play" -- where one customer subscribes to voice, video, and data services -- makes for three RGUs per customer. That's why cable and telecom providers alike are trying so hard to suck you into a nice, fat service bundle, possibly at a decent discount to buying each piece separately.

It's a tough battle that will only heat up, so now is the time to make a move for a piece of that subscriber pie. Comcast and its cable cadre are moving into the phone service that was once the exclusive domain of companies like Verizon and AT&T (NYSE: T), but the phone companies are fighting back with video services of their own. And so it goes.

Comcast does miss Wall Street's earnings targets fairly often, possibly because there's no official hand-holding to help the poor analysts adjust their sights. But that's all short-term noise that doesn't matter to a long-term Fool anyway. You're better off listening to what management says about the business and its future than going myopic over earnings numbers.

What's clear is that the American consumer is hungry for more, faster, better, and cheaper entertainment and communications services, and Comcast should have no trouble generating plenty of cash over the next few years.

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