NEW YORK (TheStreet) -- Comcast (CMCSA) - Get Comcast Corporation Class A Report stock is slumping by 0.97% to $61.53 in mid-afternoon trading on Tuesday, as the Justice Department's antitrust division investigates whether the company's $5 billion advertising-sales businesses are inhibiting competition, the Wall Street Journal reports.
The probe is examining "monopolization or attempted monopolization" of the "spot"-cable ads business and whether Comcast's deals with pay TV competitors are an illegal restraint of trade, the Journal adds.
"Spot" cable ads allow smaller businesses to air their ads to a specific location, rather than paying for a national spot.
Within a $70 billion television advertising market that Comcast called "robustly competitive," local cable advertising contributes just 7% of local ad sales, according to the Journal.
Comcast is a media and technology company based in Philadelphia.
Separately, TheStreet Ratings team rates COMCAST CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
We rate COMCAST CORP (CMCSA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CMCSA's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $4,979.00 million or 4.71% when compared to the same quarter last year. Despite an increase in cash flow, COMCAST CORP's average is still marginally south of the industry average growth rate of 6.93%.
- The debt-to-equity ratio is somewhat low, currently at 0.92, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.49 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: CMCSA
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.