With all the worries about cord cutting looming over the cable business these days, you might think it's home to nothing but dangerous stocks. The latest numbers on the trend came in last month-and they weren't pretty.
According to market research firm Convergence Consulting, more than 1.1 million U.S. households dumped cable last year, bringing the total to 24.6 million, or 20.4% of all households in America. The trend isn't slowing down, either: Convergence says by the end of this year, the ranks of the cable-free will jump to 26.7 million.
That might make you think Comcast (CMCSA) - Get Comcast Corporation Class A Report , America's largest cable operator, with 22.4 million subscribers, is a stock to avoid right now. The company's cable division supplied 64% of its first-quarter revenue.
But if the cord cutters are killing cable, someone forgot to tell Comcast, which is pulling in more cable customers than it has in nearly a decade. In its first-quarter results, the company said it attracted 53,000 new TV subscribers, blowing past analyst estimates of 32,000 to 35,000.
How? For one, it's keeping customers loyal by co-opting things they love about the Web and their smartphones. Its X1 set-top box, for example, recommends shows based on viewing habits, can seek out programs based on what's trending on Twitter and comes with a voice-controlled remote.
Comcast added 1.1 million X1 users in the first quarter, up 53% from a year ago. In all, nearly 35% of its video customers now use the device, CFO and senior vice-president Michael J. Cavanagh said on the post-earnings conference call.
The company's overall earnings per share rose 3.7%, to 84 cents, well ahead of the consensus forecast of 79 cents. Revenue gained 5.3%, to $18.79 billion, also topping analysts' expectations of $18.64 billion.
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If you're still worried about cord cutting, you can take solace in the fact that Comcast is well-diversified: even though its cable business supplied nearly two-thirds of its 2015 revenue, that division includes a grab bag of other operations, such as home phones, business services, advertising and high-speed Internet.
When you separate those out, you're left with just 28.0% of Comcast's first-quarter revenue coming from video subscribers. The cable division's next-biggest category, high-speed Internet, chipped in 16.0%-and it's growing nearly twice as quickly, with sales up 7.6% year over year, compared to 3.9% for video.
That's to say nothing of the other side of the company, entertainment juggernaut NBCUniversal, owner of NBC, Universal Pictures, the Universal Studios theme parks, specialty channels like E!, and Netflix-competitor Hulu, to name a few.
Last week, Comcast said it would buy DreamWorks Animation, creator of Shrek and Kung Fu Panda, for $3.8 billion. That will make it easier for the company to build attractions around these properties at its theme parks and gives it a new tool with which to take on Walt Disney, owner of Lucasfilm, Marvel and Pixar.
Analysts, for their part, are bullish on Comcast stock: the average 12-month price target is $70, up about 14% from today's level. Meantime, Comcast's forward price-to-earnings ratio is 15.7, a discount to rivals like Time-Warner Cable, at 26.1, Dish Network, at 18.1, and, on the media side, Disney, at 16.7.
And don't forget the dividend. The shares yield just 1.8%, but that figure masks strong dividend growth: in the past five years, the company has raised its quarterly payout by 144.4%.
The bottom line? Comcast is far from a dangerous stock. It's an undervalued innovator with significant growth-and dividend hikes-ahead. Don't let the cord cutters keep you on the sidelines.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.