Walt Disney (DIS -1.08%) and Comcast (CMCSA -0.15%) began as vastly different companies. But when Comcast bought NBCUniversal in 2011 from General Electric, it became heavily involved in both content development and theme parks.

While many differences remain, Comcast's acquisition made them direct competitors in many respects. That factor alone might lead investors to wonder which communication stock is better, warranting a closer look at each company. 

The case for Disney

Content and theme parks have become Disney's bread and butter, so much so that it recently consolidated its company into two segments.

Content falls under its Disney media and entertainment distribution segment. This includes streaming services and Disney's content-related groups such as studios, entertainment, and ESPN. In its fiscal second quarter (ended April 1), it accounted for over 64% of the company's revenue.

As the name implies, Disney's parks, experiences, and products segment includes theme parks, as well as resorts, cruise ships, and consumer products. Although this segment made up less than 36% of revenue in fiscal Q2, it accounted for most of Disney's revenue growth, increasing at a 17% rate year over year versus 6% for media and entertainment.

Overall, revenue of $22 billion in fiscal Q2 rose 13% year over year. Also, with costs and expenses growing at 11%, that helped net income grow by 170% to nearly $1.3 billion. However, Disney was still recovering from the pandemic last year, leaving it with a lower net income base, which increased Disney's profit growth percentage.

Despite the higher profits, the stock has struggled amid a bear market last year. Also, the recovery in profitability helped to leave it with an elevated P/E ratio, selling at about 40 times earnings.

Still, that valuation should fall as Disney's recovery continues. As the company moves on from the legacy of the pandemic, Disney's financials should show further improvement.

How Comcast fares in the current market

As a provider of cable TV and later internet and telecom services, Comcast seemed more complementary than competitive to Disney. With its takeover of NBCUniversal in 2011, it acquired an extensive content library and theme parks, making it more of a direct alternative to Disney.

But despite that move, Comcast remains largely a service provider. Its residential connectivity segment and its platforms and business services connectivity segment comprised about 68% of its revenue in the first quarter of 2023. Also, given the 2% decline in revenue over the previous year, these segments have done little to boost Comcast's stock.

Content and experiences made up the remaining 32% of the company's revenue. Unfortunately, that experienced a more severe revenue drop as revenue fell 9.5%. The bright spot was its $1.9 billion in theme park revenue, which increased 25% yearly.

Unfortunately for Comcast, that makes up a small part of Comcast's $30 billion in revenue, which fell 4% year over year. Still, the company controlled its cost and expense growth and earned an additional $607 million from investments and other income. That led to $3.8 billion in quarterly profits, 8% more than last year.

Amid those earnings, the stock has gained back most of last year's losses, though it is still down modestly over the last 12 months. Also, its P/E ratio has risen in recent months. Now, at a 30 earnings multiple, its valuation is near multiyear highs, though it remains significantly cheaper than Disney.

Disney or Comcast?

Given current conditions, Disney appears more likely to drive higher returns. Both companies have earned their highest growth from their theme park segments and continue to experience struggles on the content side.

However, theme parks account for a much higher portion of Disney's revenue. Moreover, Comcast's primary focus is on telecom services, and that business is mainly responsible for Comcast's revenue decline. Disney is not in that business, which confirms that Disney operates a company better positioned to drive higher returns.