Comcast (CMCSA) reported another good quarter, seemingly a habit for the company.  Against a lot of noise and negative headline regarding cord cutting, cord shaving, anti-cable regulation, and technological change, the company continues to execute superbly.

The latest quarterly results were issued almost simultaneously with the acquisition of DreamWorks Animation (DWA).  CMCSA paid a steep price for DWA but the acquisition is strategic more so than financial.  Furthermore, CMCSA has an enterprise value approaching $200 billion, making the expenditure of $3.8 billion a low-risk move.  Capturing DWA’s intellectual property (Shrek, How to Train Your Dragon, Kung Fu Panda) and relations hips in China offer upside to CMCSA’s TV networks, theme parks, and film studio.

Getting back to earnings, consolidated revenues grew 5.3% and operating cash flow rose 6.9%.  At the cable business, revenues were up 6.7% driven by 269,000 new customer relationships and a 4% increase in revenue per subscriber.  Broadband is the major driver with revenues up 7.6% and 438,000 new subscribers.  The much maligned cable TV business saw 3.9% revenue growth and 53,000 new subscribers.  You read that right.  Despite all the talk about cord cutting, CMCSA has been adding cable TV subscribers.  Heavy investment in the network and the X1 set top box and software is allowing CMCSA to gain market share, particularly from satellite.  Skinny bundles, which can hurt NBC Universal, provide a more balanced impact on the cable TV business.

An old adage on Wall Street is that bull markets climb a wall of worry.  This is less applicable to individual stocks but does still apply. CMCSA faces many worries but so far they are not impacting the company, which is thriving, rather than reeling.  We find the combination of steady, moderate growth in financial metrics, unusually strong balance street metrics, shareholder friendly capital allocation, smart strategic thinking, and excellent operational execution very attractive.  On a sum of the parts basis using peer comparisons, the shares belong in upper $60s.

CMCSA is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  CMCSA is a net long position in the Entermedia Funds.  Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.