Moody's Likes What It Sees at Comcast (CMCSA)

Comcast Corporation (NASDAQ: CMCSA) received a subtle yet rather large compliment from a ratings agency this morning.  Moody’s raised its rating on the company’s long-term senior unsecured debt further up into ‘investment grade’ territory.  If you follow ratings agencies at all, you have probably noticed that the trends have been toward downgrading companies because of falling credit metrics.  An upgrade in today’s environment is probably worth taking a look at.  The ratings were taken from Baa2 to Baa1 and the ratings outlook is now ‘stable.’  This review was initiated in early February and it covers roughly $32 billion worth of the company’s debt.

Moody’s said this reflects the expectation that its 2008 debt-to-EBITDA leverage of 2.7X will continue to improve.  The note hints that this number will be sustained at under 2.5X.

Favorable issues are the predictability of subscription revenues, moderating revenue growth, stable cap-ex, and increased free cash flow.  The stable outlook also considers its non-cyclical cash flow and steady margins.

We also wanted to look at what the ‘consensus’ from outside analysts on Wall Street is in comparison of the expectations.  On a non-GAAP basis, Thomson Reuters has a consensus earnings target of $0.99 EPS for 2009 and $1.12 EPS for 2010.  The revenues in those consensus estimates are expected to grow from $35.45 billion to $36.8 billion from 2009 to 2010.  So that is roughly 12% earnings growth and roughly 4% revenue growth expected from 2009 to 2010.

Shares are up some 2.5% at $13.96 today, and the 52-week trading range is $11.10 to $22.86.

JON C. OGG