Comcast Stock: 5x Earnings, ~6% Yield, a Spinoff Catalyst — Why We Say BUY While Wall Street Cuts (CMCSA)

Comcast Corporation (CMCSA) Q2 2026 — Comcast (CMCSA) reported Q2 2026 with a soft headline that was mostly optics: revenue of $29.94B (-1.2% YoY, but +4.7% pro forma after the Versant and German-Sky separations), adjusted EPS of $1.04 (-16.7%, versus a prior-year quarter that included a $9.4B Hulu gain), and adjusted EBITDA of $8.90B (-13.4%; -5.3% pro forma). The number that matters held up: free cash flow rose 2.3% to $4.60B. Under the hood the quarter was better than it looked — a record 448,000 wireless line net adds (total lines 10.2M), Business Services revenue +3.7% at a 56.7% margin, and Peacock's first-ever quarterly profit ($189M EBITDA, a $290M YoY swing, 48M paid subs). The soft spots were real too: 167,000 broadband and 280,000 video customer losses, and softer theme-park profit. Management also announced a tax-free spinoff of NBCUniversal and Sky and paused buybacks to fund it. The stock has been crushed to ~$22 (near a 52-week low, down ~33% from the highs), leaving it at ~5x earnings, a ~15% free-cash-flow yield, and a covered ~6% dividend (18 straight years of raises). Our owner-earnings / DCF pegs fair value near $32 — about 45% above the price and above the Street's ~$28 average, which analysts have been cutting. Our call: BUY, 4/5. Comcast is one of the most hated blue chips in the market — a cash machine so out of favor it trades at barely five times earnings, yields almost 6%, and throws off a ~15% free-cash-flow yield. The bear case is real: its crown-jewel broadband business keeps losing customers to fixed-wireless and SpaceX's Starlink, and the stock has been cut by a third to around $22. But Q2 2026 had far more going on than the ugly headline. On a comparable, pro forma basis revenue actually grew 4.7%, free cash flow rose to $4.6B, wireless posted a record 448,000 net line adds, Peacock turned its first-ever quarterly profit, and management announced a tax-free spinoff of NBCUniversal and Sky. Add it up and you have a $12B+ free-cash-flow machine on sale, paying a covered ~6% dividend (18 straight years of increases) while you wait for a value-unlock catalyst. The overhangs are genuine — ~$83B of net debt, a paused buyback, and secular broadband erosion — but at ~5x earnings a lot of bad news is already priced in. Our owner-earnings / DCF work lands fair value near $32 — roughly 45% above the ~$22 price, and above the Street's cautious ~$28 average. Our call: BUY, 4/5. Not financial advice. THE CALL: BUY (4/5, CHEAP, HATED, AND CATALYZED — A $12B CASH MACHINE ON SALE WITH A SPINOFF THE MARKET ISN'T PAYING FOR) — base-case value ~$32 vs ~$22 today. KEY METRICS: - Adjusted EPS $1.04 (-16.7% YoY); GAAP EPS $0.99 (-66.9% — prior year had a $9.4B Hulu gain) - Revenue $29.94B (-1.2% YoY reported; +4.7% pro forma ex-Versant / German Sky) - Adjusted EBITDA $8.90B (-13.4% reported; -5.3% pro forma) - Free cash flow $4.60B (+2.3% YoY); operating cash flow $8.09B; capex $2.90B - Domestic wireless net line adds 448,000 — best quarter on record; total lines 10.2M (7% penetration) - Domestic broadband net losses -167K (improved 34K YoY); video net losses -280K - Business Services Connectivity revenue +3.7% to $2.7B; EBITDA +5.0% to $1.5B; 56.7% margin - Peacock first-ever quarterly profit: EBITDA $189M (+$290M YoY); 48M paid subs (+2M) - Studios EBITDA +$141M YoY (Super Mario Galaxy Movie >$1B box office; Obsession >$400M) - Announced tax-free spinoff of NBCUniversal and Sky; PAUSED share buyback to fund separation - Returned $2.1B to shareholders ($1.2B dividends + $0.9B buybacks); ~$83B net debt - Valuation: ~5x earnings, ~15% FCF yield, covered ~6% dividend (18 yrs of raises); stock ~$22 near 52-wk low What to watch: broadband subscriber losses narrowing, continued wireless and Business Services momentum, and a clean completion of the NBCUniversal/Sky spinoff would confirm the value-unlock thesis and justify a re-rating toward the low-to-mid $30s and beyond; the risk to respect is an acceleration of broadband share loss to fixed-wireless and Starlink, or a messy, value-destroying separation — so watch the broadband net-add line every quarter, it is the single best gauge of whether the ice cube is stabilizing or melting faster Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.