The growth rate of dividends remained relatively flat from 2013 to 2018, which is noticeable in the annual growth of 10%. However, the abnormal values in 2018 and 2019 are the result of a noticeable drop in stocks, as well as a recovery after them to high values. Growth is recovering at a fairly slow pace, and even in 2022 there are values of 8% instead of 10%. It is very likely that global external factors are once again having an owl influence on the company’s growth, the uncertainty in the economy does not make it possible to build confident forecasts for 2023. Therefore, the high annual growth values over the past five years are explained by the jump in 2018-2019, while the situation is more significant in the period up to 8 years, which takes into account the 42% failure percentage in 2018. Therefore, we can conclude that the company will eventually return to the annual growth potential of 10%, but only with a weak impact of external factors.
The ratio for the last year and three years shows a slight drop of 8.5%, however, it gives an understanding of some stability, despite the pandemic and the current influence of factors. Over the longer term of 8 years, the statistics are slightly skewed by a significant drop in 2018-2019, which creates a difference of almost 100%. Growth dynamism potential remains small at the moment, as the growth rate compared to last year and 2014 is only 1%, while comparing the same year to 2019 gives a more average figure of 8%. Accordingly, the function that describes the behavior of the indicator can be represented as a quadratic, in the form of a parabola with a vertex at the point of incidence. Given that the company’s capitalization is more than $200 billion, which is significantly more than 10, therefore, the required rate of return will be taken equal to 10% (Macrotrends, 2022). Using this indicator, the share price was calculated, which is 85.58 when taking the growth rate for the last year and three years. This price turns out to be too high compared to the actual price of 34, with a maximum of 59 (Macrotrends, 2022). Taking the growth rate, which takes into account growth over the past 8 years, the calculated share price turns out to be underestimated – only about 12. The closest value to the truth is obtained when taking the average growth rate for 8 years – the share price becomes about 20.
If we take this eight-year period as a basis and the fact that in 2020 the shares rose to a value of 59, then the current value potential has not been exhausted. However, it is not large, as shown by these calculations. In the eight-year period compared to the last year, which is considered a low-end approach, the share price is too high. On the other hand, this parabolic behavior is explained by the decline and recovery after 2018, which generally promises growth in the absence of other strong determinants. The last year in the perspective of three, which was taken as high-end, demonstrates the high potential of the stock price, which is really closer to the truth, since after 2018 stocks are growing at a different pace, but growing. Although the percentage of growth is getting lower, the price has returned only now to the pre-crisis period, therefore it may well rise further. Applying the constant growth formula, you can see that, again taking into account the eight-year period, stock prices are overpriced in the market, although this assessment has the same problem as the low-end: taking into account the statistical outlier in 2018-2019. However, the arithmetic mean between low-end and high-end valuations gives the most accurate value, close to the current price of Comcast shares.
Reference
Macrotrends. (2022). Comcast Balance Sheet 2009-2022 | CMCSA. Web.