Comcast at 7x Earnings: Bargain or Value Trap?
Comcast is neither a clear bargain nor a clear trap: it passes some of the tests that separate the two and fails others. At $22.69 it trades at 7.1 times trailing earnings and 6.3 times forward earnings, with a free-cash-flow yield near 21% and a dividend yield of about 6%.
- But its core broadband business lost 144,000 customers in the third quarter (against 91,000 a year earlier), connectivity revenue fell 2.7%, and free cash flow for nine months is down 14.5%.
- The cheapness is explained by that decline, and whether it is a trap depends on whether broadband stabilises.
This is analysis, not a recommendation.
What does a P/E of 7 actually tell you?
| Measure | Comcast | What it says |
|---|---|---|
| Trailing P/E | 7.1 | About $7 of price per $1 of last year's earnings |
| Forward P/E | 6.3 | Analysts expect earnings to hold or rise slightly |
| Free-cash-flow yield | 21% | $4.82 of free cash flow per share on a $22.69 price |
| Enterprise value to EBITDA | About 4.4x | Equity of $80 billion plus about $80 billion of net debt, against third-quarter EBITDA annualised |
| Price to book | 0.87 | Below the value of its accounting equity |
| Dividend yield | 6.0% | $0.33 a quarter |
Trailing P/E ratios from this site's weekly data of October 23, 2026. Comcast, in green, trades below telecom (AT&T, Verizon) and well below Disney and Netflix.
A low P/E is a signal, not a conclusion: the market pays little for a dollar of earnings when it expects those earnings to fall. The question is whether the fall is already in the price.
How does Comcast do on the value-trap tests?
| Test | What the numbers show | Verdict |
|---|---|---|
| Is revenue shrinking? | Reported revenue fell 6.1% in Q3 to $29.3 billion because of the Versant spin-off. On a pro forma basis it rose 0.5%. Connectivity revenue fell 2.7% | Mixed: stable overall, falling in the core |
| Is the core losing customers? | Domestic broadband lost 144,000 customers in Q3 (91,000 a year earlier) and now has 28.3 million. Wireless added 368,000 lines | Fails: losses are growing |
| Are profits falling? | Adjusted EBITDA fell 5.8% reported, but rose 0.8% pro forma. Adjusted EPS fell to $1.07 from $1.12 | Mixed |
| Is cash flow holding? | Free cash flow was $4.2 billion in Q3, down 14.8%, and $12.7 billion for nine months against $14.9 billion | Fails: down about 14% |
| Is debt manageable? | Debt was $87.4 billion at September 30 against $7.6 billion of cash, about 2.3 times EBITDA in Q2 reports | Passes |
| Is anything growing? | Peacock earned $261 million of adjusted EBITDA (a $478 million swing), Media EBITDA rose from $247 million to $769 million, and business services grew 2.7% | Passes |
| Is management acting? | It spun off Versant in January, plans to separate NBCUniversal and Sky by mid-2027, suspended buybacks and reportedly expects a restructuring charge above $1 billion | Passes, with execution risk |
The pattern is clear: the balance sheet and the growth businesses pass, and the core broadband customer trend and cash flow fail. A value trap is usually a company whose cheap multiple hides a core business that keeps shrinking. Comcast's core is shrinking slowly, about half a percent of broadband customers a quarter, while other parts grow.
What would make it a bargain, and what would make it a trap?
| It is a bargain if | It is a trap if |
|---|---|
| Broadband losses narrow as price and promotion changes settle, as Q2 (167,000 lost, an improvement of 34,000) briefly suggested | Losses keep widening, as in Q3 (144,000 against 91,000), and fiber and fixed-wireless rivals keep taking share |
| Free cash flow stabilises near $16 to $17 billion a year | Free cash flow keeps falling as restructuring costs and lower margins hit |
| Wireless, business services, Peacock and Media offset the broadband decline | Theme parks (EBITDA down 17.1% in Q3) and licensing weaken further |
| The planned NBCUniversal and Sky separation leaves a clean, cash-generating connectivity company and a well-covered dividend | Debt, the dividend or both are reshuffled in ways that hurt owners |
Our guide on how to check if a stock is a value trap lists the tests, and what growth does a share price imply shows how to read the price: at $22.69 this site's reverse DCF says the market needs far less than the baseline growth to justify it, which is why the DCF shows a +72.4% margin of safety.
How does CMCSA look on this site's checks?
From the weekly data of October 23, 2026, on the Comcast stock page:
| Measure | CMCSA | What it tells you |
|---|---|---|
| Price / market value | $22.69 / $80.5 billion | 30% below its 52-week high of $32.86 |
| Trailing / forward P/E | 7.1 / 6.3 | Price per dollar of earnings, last year and expected |
| Price to sales / price to book | 0.65 / 0.87 | This site's limits are 7 and 8 |
| Revenue growth / net margin | -0.3% / 9.2% | Trailing twelve months |
| Free-cash-flow yield | 21.2% | Free cash flow per share of $4.82 |
| Dividend yield | 5.98% | Payout 43% of earnings |
| Debt to equity / interest coverage | 0.94 / 6.1x | Total debt against equity, and earnings against interest |
| 1-year change / RSI | -17.6% / 54.4 | RSI below 30 is oversold |
| Value filters / margin of safety | 6 of 8 / +72.4% | A neutral DCF that fades growth from 8% to 2.5% |
What should you read next?
More on Comcast from the same data: how much debt does Comcast really have? and is Comcast's 6% dividend safe?.
Sources
- Comcast Q3 2026 earnings release (SEC, October 22, 2026): revenue, EBITDA, EPS, free cash flow, segments
- Comcast Q3 2026 Form 10-Q (SEC): debt, dividends, buybacks, separation
- Comcast Q2 2026 earnings release (SEC, July 23, 2026): broadband, leverage context
- Comcast on this site: price and ratios, October 23, 2026
The 10-Q's liquidity section could not be read, so the 2.3 times leverage figure comes from analyses of the second quarter. The restructuring charge above $1 billion comes from press reports and was not in the release. This is educational content, not investment advice.
Comcast value FAQ
Is Comcast a value trap?
It has some trap features, including shrinking broadband and falling cash flow, and some bargain features, including a 7 times P/E, a 21% free-cash-flow yield and manageable debt. It depends on whether broadband stabilises.
Why is Comcast's P/E so low?
Investors expect earnings to fall as broadband customers leave for fiber and fixed wireless and as cable video declines, so they pay little for each dollar of profit.
How much free cash flow does Comcast make?
$12.7 billion in the first nine months of 2026, against $14.9 billion a year earlier, about $4.2 billion in the third quarter.
Is Comcast cheap compared with other media and telecom stocks?
On P/E, yes: 7.1 against 11 for AT&T and Verizon, 19 for Netflix and 23 for Disney. Charter is cheaper at 3.9 but carries far more debt.
What does Comcast pass on this site's checks?
6 of 8 value filters, 6 of 8 Buffett-style checks and 3 of 5 Lynch-style checks, with a +72.4% DCF margin of safety.