Comcast (CMCSA - Free Report) reported third-quarter 2018 adjusted earnings of 65 cents per share that beat the Zacks Consensus Estimate by 4 cents. The figure jumped 27.5% year over year.

Revenues inched up 5% year over year to $22.14 billion and beat the Zacks Consensus Estimate of $21.75 billion.

Cable Communication Details

Revenues climbed 3.4% from the year-ago quarter to $13.79 billion.

High-speed Internet revenues increased 9.6% year over year to $4.32 billion, primarily driven by an increase in the number of residential high-speed Internet customers and rate adjustments.

Business Services revenues were up 10.6% to $1.80 billion, primarily due to increasing number of customers adopting small and medium-sized product offerings.

Comcast Corporation Price, Consensus and EPS Surprise

Advertising and other revenues advanced 15.2% and 1.1% to $684 million and $594 million, respectively, on a year-over-year basis. Advertising revenues were driven by higher political advertising revenues. Growth in other revenues was driven by an increase in security and automation services revenues.

Voice revenues were $982 million, down 3.1% year over year, primarily due to declining number of residential voice customers. Video revenues also dipped 2.9% to $5.59 billion, reflecting a decrease in the number of residential video customers.

Total Customer Relationships increased 288K to 30.1 million. Total high-speed Internet customer net additions were 363K. Total security and automation customer net additions were 42K at the end of the quarter. Total video customer net losses were 106K, while total voice customer net losses were 35K.

At the end of the third quarter, 68% of Comcast’s residential customers received at least two Xfinity products.

NBCUniversal Details

Revenues increased 8.1% year over year to $8.63 billion.

Cable Networks’ revenues increased 10.8% from the year-ago quarter to $2.88 billion, primarily due to higher distribution (up 9.5%), content licensing & other revenues (surged 36.1%), and advertising revenues (up 4.2%).

Broadcast Television revenues increased 15.4% from the year-ago quarter to $2.45 billion, owing to higher advertising (up 9.2%), and distribution & other revenues (up 23.9%).

Filmed Entertainment revenues increased 3.8% from the year-ago quarter to $1.82 billion. Theatrical revenues increased 16.7%, driven by strong collections from Jurassic World: Fallen Kingdom and Mamma Mia! Here We Go Again. Home Entertainment revenues decreased 13.1%, while content licensing revenues increased 8.6%.

Theme Parks revenues were $1.53 billion, decreasing 1.4% year over year due to lower attendance as a result of severe weather conditions and natural disasters in Japan.

Operating Details

Consolidated adjusted EBITDA increased 2.5% from the year-ago quarter to $7.31 billion. However, adjusted EBITDA margin contracted 80 basis points (bps) to 33%.

Consolidated programming & production costs increased 10.8% from the year-ago quarter to $6.71 billion. As percentage of revenues, programming & production costs increased 160 bps on a year-over-year basis.

Cable Communications adjusted EBITDA increased 7.6% from the year-ago quarter to $5.62 billion. Adjusted EBITDA margin expanded 160 bps to 40.7%. Notably, adjusted EBITDA per Customer Relationship was up 4.4%.

Programming expenses inched up 1.4% on a year-over-year basis, owing to higher retransmission consent fees and sports programming costs. Non-programming expenses remained flat.

NBCUniversal adjusted EBITDA decreased 8.5% from the year-ago quarter to $2.07 billion. Cable Networks and Broadcast Television adjusted EBITDA grew 6.9% and 1.8%, respectively. However, Filmed Entertainment and Theme Parks adjusted EBITDA plunged 44.2% and 6.5%, respectively, on a year-over-year basis.

Consolidated operating income increased 1.2% year over year to $4.84 billion. However, operating margin contracted 80 bps from the year-ago quarter to 21.8%.

Cash Flow & Liquidity

In third-quarter 2018, Comcast generated $6 billion of cash from operations compared with $7.06 billion in the previous quarter. Free cash flow was $3.10 billion compared with $4.30 billion in the year-ago quarter.

As of Sep 30, 2018, cash and cash equivalents were $10.62 billion, up from $5.73 billion as of Jun 30, 2018. Consolidated net debt was $69.71 billion.

During the quarter, Comcast paid dividends of $871 million and repurchased shares worth $1.3 billion. As of Sep 30, 2018, the company had $3 billion available under its share repurchase authorization.

Comcast expects to repurchase at least $5 billion of its Class A common stock in 2018. However, the company announced its plan to pause share buyback program in 2019 to reduce debt level that increased significantly post the Sky acquisition.

Zacks Rank & Key Picks

Currently, Comcast carries a Zacks Rank #3 (Hold).

Cable One (CABO - Free Report) , Gaia (GAIA - Free Report) and DISH Network (DISH - Free Report) are stocks worth considering in the broader consumer discretionary sector. All three stocks sport a Zacks Rank #1 (Strong Buy). 

Gaia, DISH Network and Cable One are expected to report on Nov 5, 8 and 14, respectively.