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Comcast: Theme Parks, Mario Is Coming To Steal Your Meatballs

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Nintendo Releases New "Switch" Game Console

Drew Angerer

Super Nintendo World Hollywood

It happened folks! The Nintendo portion of Universal Studios' Hollywood taxable parkland conscionable opened its Super Nintendo World, nan first extracurricular of Japan. I person been anticipating this and racking my encephalon connected who stands to use astir from nan caller mustachioed mascot becoming a champion successful Los Angeles. I first rifled done nan Nintendo (OTCPK:NTDOY) IR presentations but couldn't find a bully root for their licensing structure. Going consecutive to nan root and realizing Comcast (NASDAQ:CMCSA) owns not only nan Universal Studios taxable parks but besides is producing nan upcoming Super Mario Bros. movie seems for illustration nan astir apt beneficiary.

Although NBCUniversal Theme Parks only dress up 4.34% of 2022's full gross mix, this is simply a conception I'm looking guardant to seeing grow. The operation of nan Super Mario Bros. movie, Super Nintendo taxable park, debased non-GAAP net multiple, low GAAP guardant net aggregate positive a dip of 35% disconnected its precocious look for illustration catalysts that are excessively bully to resist. Comcast banal is simply a bargain astatine this constituent for its 2023 catalysts which should trickle into nan income connection by nan Summer.

Super Mario Bros. Movie

thesupermariobros.movie merchandise day surface shot

thesupermariobros.movie

Now, this is what a Super Mario Movie is expected to look like! Older millennials for illustration myself who grew up pinch nan franchise person been eagerly awaiting this time to spot 1 of our favourite video crippled characters adorn nan metallic surface successful each his glory. Nightmares of Dennis Hopper, John Leguizamo, and Bob Hoskins are still lingering from nan terrible movie released successful 1993. Now that games person precocious to nan constituent wherever they almost mimic bully CGI, nan 2 tin meld into 1 and create an awesome-looking movie. I would not beryllium amazed to spot this movie make much than a Billion worldwide. I will beryllium location connected opening day.

The merchandise day of nan movie to hap conscionable aft nan opening of nan taxable parkland area is surely a strategical move by CEO Brian Roberts. I deliberation nan teaming of nan 2 is awesome. In my opinion, group who spot nan movie will want to sojourn nan taxable parkland and vice versa. Just watch really giddy immoderate of these reporters, successful their 30s and 40s are to get a preview of this parkland successful this Today Show sneak peek. This is nan procreation that grew up pinch nan franchise. It besides has each nan 3-10-year-old children who they are going to return to nan movies and nan taxable park, perchance much for their than their children's enjoyment!

The parkland summation itself will person respective monetizing factors. One is simply a wearable, that you person to salary for, wherever you tin cod points astir nan parkland to participate successful mini games. The different would beryllium apparel. Selling caller cool Nintendo cogwheel and accessories is different gross booster. I don't request to show you really cool nan parkland looks; words don't do it justice. Please spot nan Today Show nexus above.

The chart

ChartData by YCharts

Having listened to rather a fewer Mohnish Pabrai interviews, I concur pinch him that 1 of nan champion places to look for worth is nan astatine aliases adjacent 52 Week debased charts. Find nan value and investigate. I already had a mini position successful Comcast earlier this article owed to its screening connected Joel Greenblatt's magic look database astatine nan opening of nan twelvemonth for ample caps. Now that these neat mates of catalysts person arrived, I person accrued my position rather a bit. Down 35% disconnected nan stock's precocious is thing I like. Anything much than 30% is surely charismatic arsenic that is wherever nan broader marketplace would beryllium considered a clang aliases terrible bear.

Income connection trends

Cash travel and EBITDA

Comcast 2022 10K gross mix

Comcast 2022 10K

Firstly, we commencement pinch nan gross and EBITDA mix. The Theme Parks and Studios segment, which is nan attraction of this article, represents 12% of nan full gross operation and 6% of nan EBITDA mix. I afloat expect to spot nan full-year numbers for some of these items summation rather a spot some connected nan apical and bottommost lines. It should besides person an effect connected nan wide media segment's numbers arsenic they incorporated nan Nintendo franchise into their streaming platforms, attracting caller customers. Let's besides not hide merchandise income should summation and a afloat twelvemonth wherever each nan parks crossed nan world are yet unfastened afloat blast.

yahoo finance comcast revenue

yahoo finance

Looking astatine nan gross trends for Comcast from 2019 connected nan correct to TTM connected nan left, we spot a definite uptrend successful nan numbers. The costs of gross has been level since 2021, which is affirmative erstwhile matched up against an expanding apical line.

yahoo finance EBITDA numbers Comcast

yahoo finance

The aforesaid clip framework for normalized EBITDA shows maturation from $33.8 Billion to $35.9 Billion, a CAGR of 1.52%. Certainly not a maturation stock, but generating rather a batch of EBITDA and trading astatine only 4.65 X EBITDA. I usage EBITDA for media and communications companies because arsenic Joel Greenblatt points retired successful "You Can Be A Stock Market Genius", akin companies person ample amounts of goodwill and amortization. Goodwill and intangible assets are a immense magnitude of Comcast's $257 Billion successful full assets, ringing successful astatine $159.7 Billion aliases 62% of nan full plus mix. The Studios besides supply a adjacent magnitude of PPE astatine $112 Billion gross PPE. This allows for a depreciation disbursal of astir $1 Billion a twelvemonth against those assets. Comcast's full depreciation and amortization for nan 12 months ending December 31, 2022, was $34.734B according to Macrotrends.

The Goodwill is attributable to purchases of companies, media channels, aliases brands for a value paid much than their nett plus value. As galore of these assets person an indefinite life span but a batch of beneficial depreciation, EBITDA for a media institution is akin to AFFO for a high-quality REIT.

Valuation

seeking alpha worth metrics comcast

seeking alpha

Right distant my eyes show maine that nan guardant GAAP net astatine conscionable complete 11 X, mixed pinch nan existent price-to-book worth will beryllium perfect to pit up against nan Graham number for a blimpish value target. These 2 numbers multiplied would beryllium astir Ben Graham's magic number of 22.5.

With nan look being nan SQRT of 22.5 X (EPS) X (Book Value), our inputs would beryllium $19.18 Book Value, and our guardant EPS balanced to expert mean estimates of $3.63 a stock (source: Yahoo Finance). Therefore SQRT 22.5 X ($3.63) X ($19.18)= $39.57, fundamentally trading correct astatine adjacent worth pinch this GAAP metric.

Reconfiguring it to get a precocious extremity based connected EBITDA, we person $35.9 Billion successful EBITDA TTM and 4.22 Billion shares outstanding. This would springiness america an EBITDA per stock of $8.5. A reconstituted look of SQRT 22.5 X($8.5) X (19.18)= $60.56 a share, fundamentally correct backmost to its Sept. 2021 high. Blending nan 2 would springiness america an mean value target of $50 a share.

Balance expanse snapshot

yahoo finance equilibrium expanse snap

yahoo finance

Total rate astatine $4.5 Billion is not a very ample rate position for a institution of this size. Luckily they person ample free rate travel to compensate. Long word equity investments are minimal arsenic good and only adhd different $450 cardinal successful equity investments to nan company's liquidity. The existent ratio is nether 1 and indebtedness to equity is astatine 130%. The equilibrium expanse is not great, but astatine these prices, nan catalyst opportunities outweigh nan equilibrium expanse negatives successful my mind. Let nan institution attraction connected indebtedness restructuring and simplification aft they complete their initiatives and Orlando parkland buildout successful 2025.

The dividend

yahoo finance rate flow

yahoo finance

With a guardant yearly dividend of $1.16 a stock and 4.22 Billion shares outstanding, that is simply a dividend committedness of $4.89 Billion. The past 3 years' mean free rate travel has been $14.27 Billion. This is simply a payout ratio of only 34.2%. The 2.92% output is an fantabulous prize to nan finance thesis. Although free rate travel has been leaner TTM versus 2021, building connected Super Nintendo World is now complete and we could dream to spot rate from operations summation upon opening. However, capex whitethorn proceed to summation pinch nan caller Universal Park successful Orlando connected nan sky for 2025. The dividend looks safe here, nonetheless.

Risks and competition

Comcast's peers autumn betwixt media and media taxable parkland mixes. Most notable would beryllium Charter (CHTR) and Disney (DIS). Charter trades astatine a overmuch higher book value, 5X, and Disney trades astatine a overmuch higher price-to-earnings ratio. Comcast successful a consciousness is an absorbing conglomerate that is difficult to comp. They person a batch of businesses, but not ones that counteract aliases cancel retired 1 different for illustration General Electric (GE) ended up with. The main carnivore points would beryllium that nan institution has excessively overmuch indebtedness and is excessively tied to accepted television.

The institution has transitioned to go much of a broadband/fiber provider, which now makes companies for illustration AT&T (T) and Verizon (VZ) imaginable comps for nan institution arsenic well. The taxable parks are immense catalysts successful my mind, pinch nan parkland successful Beijing operating astatine afloat capacity this twelvemonth arsenic well. As agelong arsenic this business grows, it should easiness immoderate symptom successful cablegram customer losses and hopefully proceed nan apical statement maturation trend.

Summary

Having eagerly awaited some nan parkland summation and nan movie release, I dream to person a chance to adhd much astatine these prices successful nan months to come. Disney amended person immoderate antagonistic punches astatine their taxable parks arsenic I would expect them to suffer immoderate business successful Los Angeles owed to nan Universal addition. Also, nan Orlando summation is coming successful 2025:

The Orlando build will beryllium a portion of that resort's larger, much-anticipated Epic Universe parkland expected to unfastened successful 2025. Comcast CEO Brian Roberts announced Epic Universe successful 2019, calling it "the single-largest finance Comcast NBC Universal has made successful its taxable parkland business. Then-Universal Parks & Resorts caput Tom Williams described nan "vision" for Epic Universe arsenic "historic." He said nan caller parkland would beryllium "the astir immersive and innovative taxable parkland we person ever created.

Mario successful my mind resonates moreover much pinch nan American civilization than nan Japanese, though it is simply a Japanese creation. Mario whitethorn go nan caller Mickey Mouse successful nan decade to come. Even though nan taxable parks person been retired successful Japan for immoderate clip now, I don't deliberation nan afloat effect of really large nan Mario Franchise is will beryllium realized until nan parks are opened present stateside. There will beryllium imaginable synergies successful shows and apparel that are excessively galore to count. The cablegram communications monster is doing a bully occupation of pivoting/investing for maturation successful different areas. I can't hold to spot nan result. Wish I had a warp tube to 2024!

Comcast is simply a bargain pinch a blended mean value of GAAP and Non-GAAP Graham numbers astatine $50 a share.

Editor's Note: This article discusses 1 aliases much securities that do not waste and acquisition connected a awesome U.S. exchange. Please beryllium alert of nan risks associated pinch these stocks.

This article was written by

Brett Ashcroft Green floor plan picture

I'm a worth investor who enjoys utilizing classical worth ratios to prime my portfolio. Long-term focused connected debased P/B, P/FCF, PEG ratios, nan Graham Number and an occasional net-net hunter. I besides judge successful self-indexing chiefly utilizing nan Dow Jones Industrial Average arsenic my scale of prime mixed pinch Joel Greenblatt's Magic Formula.I'd for illustration to see my thought process to beryllium an amalgamation of Ben Graham, Joel Greenblatt, and Peter Lynch. I'm an avid scholar pinch an extended room of worth investment-based books.My moving inheritance is successful backstage indebtedness financing and existent estate. I'm besides a fluent Mandarin speaker successful some business and tribunal settings. I person spent a bully chunk of my big moving life successful China and Asia.

Disclosure: I/we person a beneficial agelong position successful nan shares of CMCSA, DIS, VZ, T either done banal ownership, options, aliases different derivatives. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

Editor: Naga



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