Media Companies Look Good but Comcast Looks Great

NEW YORK ( TheStreet) -- Under the radar screen of many money managers and individual investors is a quiet, steady rally among the big media companies.

This is going on while the overall stock market has been struggling and on most days falling on its face. Thursday was an anomaly for the stock market, but the media stocks keep moving higher.

Walt Disney ( DIS) moved nicely higher (up 2.9%) on average volume Thursday. DIS is pennies away from its 52-week high.

News Corp ( NWSA) also had a better-than-usual Thursday, up 2.47% on the day on below-average volume.

A Saratoga, Calif.-based start-up company named Roku announced it raised $45 million recently from News Corporation and BSkyB. It supposedly gives News Corp a leg up in the TV video-steaming business over competitors like Comcast ( CMCSA) .

"With the News Corporation and Sky strategic relationships, we are poised to further grow our leadership position and to become the TV distribution platform of the future," said Roku founder Anthony Wood in a recent statement .

News Corp is buying into the Internet video-streaming set-top box manufacturer and putting one of its senior executives on Roku's board of directors, according to the statement.

News Corp is putting its money and powerful influence where it can gain a much greater role in distributing video over the worldwide Web.

Make no mistake, Comcast will need to find its own advantageous solution, and historically it has been on track to match any competitor.

As of Dec. 31, Comcast serves 22.3 million video customers, 18.1 million high-speed Internet customers and 9.3 million voice customers in 39 states and the District of Columbia. I happen to be one of those customers, and from a customer-service perspective the company is very good.

Its Cable Networks segment consists of national cable entertainment, national cable news and information, national cable sports, regional sports and news, and international cable networks; and a cable television production studio and digital media properties.

The company's Broadcast Television segment includes the NBC and Telemundo broadcast networks. NBC and Telemundo own local television stations, broadcast television production operations and related digital media properties, which primarily include brand-aligned Web sites.

Comcast also has a "Filmed Entertainment" segment consisting of the operations of Universal Pictures, including Focus Features, which produces, acquires, markets and distributes filmed entertainment worldwide in various media formats for theatrical, home entertainment, television, and other distribution platforms.

To add to its massive revenue-generating operation, Comcast also has a Theme Parks division that comprises theme parks, studios, and a dining, retail, and entertainment complex. Comcast Corporation also owns a multipurpose arena in Philadelphia and provides facilities management and food services for sporting events, concerts, and other events.

The company aggressively offers its services directly to residential and business customers through call centers, door-to-door selling, direct mail, television, Internet and local media advertising. Comcast actively uses telemarketing and retail outlets to promote their services.

Little wonder that its first-quarter revenue growth (year-over-year) was close to 23% and quarterly earnings growth in the first quarter soared by 30%.

The company reports second-quarter results on Wednesday. It would not surprise this author if the results exceed analysts' expectations.

If the company disappoints or barely meets earnings projections and lower earnings guidance for the third quarter, we may have a chance to buy Comcast shares closer to their June 25 intraday low of $30.21.

The stock traded as low as $28.09 on May 21, and that kind of price correction isn't out of the realm of possibilities either. The chart below shows you their stock price history and how well it correlates to their earnings per share. CMCSA Earnings Per Share Chart CMCSA Earnings Per Share data by YCharts

Comcast also pays a current dividend yield of 2.1% based on a share price closer to $31. That's a payout ratio of 28%, which is both sustainable and able to support a more generous dividend.

In contrast, News Corp's current 17 cents annual dividend pays a paltry yield of 0.74% based on a share price of $22.85. NWS had first-quarter earnings growth (year over year) of nearly 47% but the quarterly revenue growth rate was a meager 1.8% compared to Comcast's 23%.

Let's take a look at a similar chart of NWS comparing its stock price history with EPS growth. NWS Earnings Per Share Chart NWS Earnings Per Share data by YCharts

For three years News Corp's earnings per share have been relatively flat, which makes a prudent investor wonder if the current price is sustainable without a large increase in EPS going forward.

NWS currently trades at a price-to-earnings ratio of around 17. CMCSA sports a PE ratio of almost 20 but a forward (one-year) PE of 14.48. News Corp's forward PE is unclear, and the date for reporting its earnings for the second quarter is not yet known. Too much uncertainty for my blood.

Here's the schedule of dates that TV networks and media companies will begin releasing the latest earnings numbers, according to the Associated Press:

July 31: Discovery Communications ( DISCA)

Aug. 1: Time Warner ( TWX) and Comcast (NBC owner)

Aug. 2: CBS ( CBS) and Scripps Networks Interactive ( SNI)

Aug. 3: Viacom ( VIA)

Aug. 7: Walt Disney (ABC owner)

Aug. 9: AMC Networks ( AMCX)

So keep your eye on your favorite media companies and don't forget to consider Comcast carefully. Analysts are looking for quarterly earnings through June 30 of 48 centa per share and full-year 2012 EPS of around $1.89.

Comcast is a great media empire, and not really over-priced with a PEG ratio (five-year expected) of only 1.12.

That said, it wouldn't break my heart to see a price correction that would bring the PEG ratio to below 1. That's when I begin salivating and rubbing my buyer's hands together.

At the time of publication the author had no holdings in the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Make smarter trading decisions and provide investment ideas that could help make you richer. Bryan Ashenberg does the dirty work so you don't have to!

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