Liberty Broadband has a Bright Future – Comcast to Shrink

Sad Comcast

Behemoth Comcast has had a great run, but its growth is beginning to slow. Instead, check out this cable company, which is packed with potential.


Comcast had a great run between 2011 and 2014, with the stock surpassing other players in the cable television industry each year. But then Wall Street started sensing risk. Audiences were clamoring for better content and technology, and online streaming company Netflix emerged as a dominant force.

At $160.82 billion in market value, Comcast is a behemoth, but does it really have the muscle to stay strong for the long term? Unfortunately, the answer is no.

Instead, check out a company in the sector that has a bright future: Liberty Broadband (LBRDA) .Liberty Broadband (LBRDA)

Comcast’s trailing 12-month return on equity of 15.22% is markedly lower than that of smaller rival Dish Network at 26.5%. And Comcast is also groaning under a $55.56 billion mountain of debt.

But here is what should really have investors worried: Comcast is slowing down.

After increasing earnings per share by more than 18% on average annually during the previous five years, Comcast is expected to deliver EPS growth of about 12.84% an an average annual basis for the half decade. That pales by comparison with the diversified entertainment industry’s expected annual average earnings growth of 15%.

In addition, after losing out on buying Time Warner Cable, Comcast needs a growth catalyst. And Comcast’s dividend yield of 1.65% isn’t inspiring. After all, the U.S. 10-year Treasury yield is about 1.6%. There are better yields to be had elsewhere in the sector such as at Viacom.  Comcast has already handed investors 18% gains this year. But it may be time to move on.

Last spring, Charter Communications bought out Time Warner Cable for $56 billion, making it the second-largest cable operator in the U.S. Liberty Broadband operates and owns a 20% interest in Charter Communications.

Liberty Broadband also controls 100% of TruePosition, a leader in mobile positioning and contextual location intelligence, areas poised for explosive growth. Clearly, Liberty Broadband is gaining the lead in this sector.

Liberty Broadband is seeing positive earnings estimate revisions. The stock is up more than 38% this year, making it one of the best-performing stocks in legendary investor George Soros’s portfolio. With earnings set for a giant spike, Wall Street is betting big on Liberty Broadband. Pivotal Research has a $94 price target on the stock, which would represent a 30% increase.

It is time to switch to Liberty Broadband and profit as Comcast’s growth potential wanes.

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