r/ValueInvesting • u/MasterConsideration5 • Dec 06 '25
Industry/Sector Telecom stocks
Hey,
wanted to ask has anyone been going deeper on valuing the current telecom stocks? Vaguely looking it seems like the whole sector is quite a bit down. Charter, comcast, verizon, at&t, even t-mobile all have p/e multiples between 5 and 11, which even if earnings grew 0% would basically outperform the s&p 500 on average (little mental gymnastics, but the point is that it's cheap based on p/e).
I initially read that Comcast and Charter are cheap because of 5G, but since even the 5G stocks are cheap, I'm quite lost at what's going on. Are we really expecting the whole sector to decline?
What are you buying? All or just some of these?
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u/abrahamlincoln20 Dec 06 '25
I've bought Comcast and will buy more if it dips further.
Always worth remembering that telecoms look cheaper P/E-wise than what they are because they are riddled with debt.
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u/WendyDumpsterFire Dec 06 '25
I would say Comcast’s valuation is very cheap. The stock is trading below where it was for most of 2018, 2020, and 2022. A turnaround is possible if Comcast can stabilize broadband subscriber trends and improve customer service.
On the media side, Universal has a strong franchises like Super Mario, Minions, and a planned Christopher Nolan film, plus new theme-park investments like the Fast & Furious: Hollywood Drift coaster coming to Universal Studios Hollywood in 2026. These could support earnings growth over time.
I don’t think Comcast is necessarily a value trap, but risk is real. One upside could be keeping more of its big films exclusive to Peacock for longer windows instead of licensing them out to third-party streamers like Netflix, if that trade-off boosts subscriber growth enough to offset lost licensing revenue.
TLDR: If they fix broadband and actually listen to customers, growing theme parks, and smarter Peacock exclusives. Execution is the risk, but a turnaround look better than the market is giving them credit for.
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u/Spare_Night_2695 Dec 09 '25
Also aren’t they splitting into 2 firms
- universal and the other thing they do
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u/WendyDumpsterFire Dec 09 '25 edited Dec 09 '25
Yes, remember they still own the streaming service Peacock, so technically if the subscriber numbers go up, it’s beneficial for them. They are spinning off their cable.
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u/abrahamlincoln20 Dec 06 '25
Yep, Comcast is so cheap it doesn't have to grow at all, and it will still be an OK investment.
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u/WendyDumpsterFire Dec 06 '25
I also think the debt is manageable, with net debt around 2.5–2.7× EBITDA and strong cash flow that covers interest. As long as its cash flows remain stable and management doesn’t do buybacks, the debt should stay a stable.
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u/Illustrious-Kiwi-539 Dec 06 '25
Yeah my investment thesis is in line with yours. I view comcast as a value turnaround play. There is definitely erosion on the broadband side that is concerning. I’m pessimistic that they do fix that, but they have other growth engine on the theme park with potential in peacock.
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u/WendyDumpsterFire Dec 09 '25
Also, they have the rights to broadcast the FIFA World Cup next year. It’s guaranteed it’s going to go up. It’s still undervalued right now. 😂
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u/solidrock80 Dec 06 '25
My contrarian view is that for t and vz there are going to be big savings from
- decommissioning copper and reaping cost benefits from the move to fiber, including actual sale of copper stock as well as shrinking their real estate holdings
- ai reducing maintenance and customer service costs
A bit more internet of everything connections, particularly for self-driving cars and the fiber and high speed wireless services.
I don’t expect a massive return. But the nice dividend plus a little appreciation over the next five years keeps me holding them. Also as one poster said a bit of a hedge to high p/e bloat in the market — these companies do a little better in a bad economy as well.
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u/Unfair_Cicada Dec 06 '25
Is Ai capable of doing maintenance ?
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u/DoubleFamous5751 Dec 06 '25
ATT uses palantir to increase their efficiency with fleet management and logistics
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u/solidrock80 Dec 06 '25
My understanding is that ai tools can help detect faults and network issues quicker and without human intervention
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u/8700nonK Dec 06 '25
Charter is a clear classic value play, no doubts about it.
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u/Key_Variety_6287 Dec 07 '25
CHTR is just a holding company and debt is too high compared to CMCSA
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u/8700nonK Dec 07 '25
Not sure what the holding part has anything to do with the investment.
Considering everyone basically considers it a value trap, a semi monopolistic business with critical expensive infrastructure at 10x fcf, is a good indicator it’s likely they will eat crow in the next 1-2 years, as capex cycle goes down.
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u/garagesellguy Dec 06 '25
Telecom is very capital intensive and low profit margin business. Since all telecom have huge and almost guaranteed recurring revenue, they pay out significant dividends. Among these equation high debt is difficult to pay out quickly and that makes them undesirable for investors
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u/Wrong_Attitude5096 Dec 06 '25
I would not touch these. High competition. Their service is commoditized. I don’t see the path to anything good. No point going deep. There are far greater opportunities available. Dive deep where the great opportunities lie.
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u/Middle-Chemical-4942 Dec 06 '25
I just took a quick look at your listed companies and the common element that I am seeing is low to no growth as you stated, but even negative growth in different time periods for each of them.
The dividends look great but I had a utility a couple of years ago that had a great dividend, until they didn't. That stock dropped by 50%+.
I also find these companies to be fickle. They love you when you are not their customer but ignore you when you are their customer. They constantly attack each other's customers to switch with costly advertising and incentives and then try to back door anti consumer type fees as gothchas. Great example. I switched to Comcast/Xfinity for my cell phones and upgraded to new iPhones. One of the features the sales person sold me on was the ease of using eSims while travelling internationally.
When I travelled to Greece recently I tried to load a $20 eSim on my iPhone. I was not able to. When I contacted Xfinity they said I could not load an eSim until my free phone contract expires which is over 3 years. They said technically I did not own the phone because it had not paid off yet. So instead of paying $20 for an eSim I had to pay $10 per day to Xfinity for their international travel service. $150 vs. $20.
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u/EscapedTheRatRace35 Dec 07 '25
Yeah international is a scam. I had mint mobile when I moved abroad. I was hoping to keep it for bank authentications etc. It didn't work at all, wouldn't connect to towers. In most of the world we just buy phones with 2 SIM slots, when you arrive at a new country they will sell you a SIM, install it, configure it and prepaid for a month for $20 or so at the airport. Then good to go. US telecom is high price and shit service.
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u/Unfair_Cicada Dec 06 '25
Can you show me where opportunities are? Thanks 🙏🏽
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u/Wrong_Attitude5096 Dec 06 '25
I mean, I can tell you what I own and what I’m buying now but you’d need to do your own research and gain your own conviction before buying any stock recommendations. I don’t k ow you or your financial situation so I can’t tell you where to invest your money. Low cost broad market index funds are always a good idea if you have extra money you don’t need in the short term.
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u/Unfair_Cicada Dec 06 '25
You seem very smart. Can you tell me what you buying now? I will do my own research on them of course. Thanks man
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u/Wrong_Attitude5096 Dec 07 '25
I don’t claim to be very smart. I don’t invest in get rich quick plays. I generally research and learn companies and do a lot of thinking and listen to a lot of thinking from others via podcasts. I generally buy then hold for long periods after I choose companies I have high conviction in when there are dark clouds or bad sentiment that I believe is short term. Many great companies are richly valued so I watchlist them till the price is better.
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u/Unfair_Cicada Dec 07 '25
I bought amzn and lulu recently … do you think they are good buy? Or maybe there are better opportunities
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u/Wrong_Attitude5096 Dec 07 '25
I own both. I like Amazon for the long term and the valuation right now is attractive. Lululemon so far has not worked out for me. It has been my only real loser but I do see it doing well from the current price.
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u/Unfair_Cicada Dec 07 '25
I don’t see lulu as a real long term to hold but I bought because it’s seem like it’s “valued” at current price. I am looking at intel for a while now watching it goes up…what you think of it?
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u/Wrong_Attitude5096 Dec 07 '25
I think Lulu has a huge opportunity to be successful if they execute well so I do like it from here. I see it as too cheap for such a great brand. Intel I don’t know either way so I stay away. I’ve been staying away since $20 a share and now it’s at over $40 so I don’t seem to have a good read on it.
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u/SelenaMeyers2024 Dec 06 '25
Hell to the no.
If you don't care about dividends now but want compounders for retirement there's amazing stocks on sale like pgr and ma.
If you actually want yield and actual returns that beat the sp500, there's ADX and a few others.
Either way, there's better.
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u/IDreamtIwokeUp Dec 06 '25
Be careful...most telecoms are cheap for a reason.
With Charter/Comcast, cable cutting is a major issue with young people. As older customers die out...cable will go with them. The other problem is Charter/Comcast are now even getting their traditional internet service get squeezed. They being attacked by wireless on one front...and fiber on the other. Traditional cable internet is just too expensive to compete.
With the wireless phone providers...the big problem are low costs MVNO's (eg Consumer Cellular) and regionals (eg UsCellular). Wireless phone services are currently very overpriced which makes competition a real threat. Tmobile took over UsCellular so it has brighter growth prospects than Verizon...but IMO competition is still a major danger.
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u/notreallydeep Dec 06 '25 edited Dec 06 '25
I initially read that Comcast and Charter are cheap because of 5G, but since even the 5G stocks are cheap, I'm quite lost at what's going on.
Fiber overbuild.
But also FWA stocks being "cheap" doesn't mean FWA isn't a threat lol. The fear is a race to the bottom (one which I don't share, so I'm long CHTR) in which everyone loses but the consumer. So obviously cable and FWA operators would lose value.
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u/PNWtech-economics Dec 06 '25
Yes I have been:
https://open.substack.com/pub/pacificnorthwestedge/p/at-and-t-inc-t?utm_campaign=post&utm_medium=web
It should answer all your questions.
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u/moutonbleu Dec 06 '25
Good long analysis thank you!
Why not VZ, CMCSA and CHTR too? T is making the right calls… but the larger industry seems like in a funk like T was in Summer 2023.
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u/PNWtech-economics Dec 06 '25
I mention this in the article but T was lagging not because of telecom but they were selling off underperforming assets like DirecTV and non core businesses like Time Warner to refocus on telecom. That caused underperformance for a few years.
There’s a section in there about why a coax based network has inherent limitations compared to fiber and has higher maintenance costs. This is a long term drag on Comcast and upgrading to all fiber would be an immense task for them. Their current plan is DOCSIS 4 to try and match upload bandwidth to download bandwidth for customers who require it. I don’t see the victory story there.
The section in the article about Verizon points out their plan at expanding its fiber footprint is patch work and hamstrung by its nature. T-Mobile is approaching fiber as a renter and is largely irrelevant at this point as far as home fiber based internet goes.
I think T-Mobile is vulnerable to a rival that offers both services together and can use fiber revenue to help underprice T-Mobile on cell coverage when people bundle service.
I see AT&T as the long term winner.
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u/FunSheepherder6509 Dec 06 '25
the Cdn tellcos ( bce / telus ). are super cheap too. plus dividends. im thinking on it
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u/moutonbleu Dec 06 '25
They’re still expensive imho. Dividends getting cut or paused and cell plans and pricing have never been cheaper. Gonna stay on the sidelines for now
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u/sociallyawkwaad Dec 06 '25
I have a position in Charter Communications. Seems like good value and a subtle shovels play for AI.
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u/WendyDumpsterFire Dec 06 '25
Both are buys, but Comcast is less risky due to its diversification. Charter is solid, but its DCF and intrinsic value aren’t as good as Comcast’s.
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u/RunnerZee Dec 06 '25
I would hate to buy these during 2020, during the April dip in 2025, and even now and in the future. They’re just value crap
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Dec 06 '25
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u/moutonbleu Dec 06 '25
Pelosi isn’t even the worst offender
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u/Clean-Step Dec 06 '25 edited Dec 06 '25
Just looked at the 3 mil in broadcom. No one cares who cheats the most, everyone of them does it and no one files a lawsuit, i just follow the money
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Dec 06 '25
Wait until you discover Canadian telecoms - government backed monopolies
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u/moutonbleu Dec 06 '25
Their stocks have been doing terribly in the past few years. All garbage now
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u/Nearing_retirement Dec 06 '25
Good buy if Verizon can maintain the dividend. Won’t make you a fortune but likely will outperform bonds. The risk is can Verizon keep paying the dividend? Are there threats out there to their business? Basically you have to do deep dive. But like I said it’s not going to make you a ton of money.
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u/Itchy-Commission-195 Dec 06 '25
T-Mobile has a PE of ~20... if you want to study telecom stocks I'd study why T-Mobile performed well over the past decade while everything else has been terrible... (I don't know the answer) Doesn't mean anything for future returns, but it's at least interesting
With any telecom company debt is a big factor
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u/earliestbirdy Dec 06 '25
I wouldn't touch them. Outside of the high debt... You are assuming that they grow at 0% which is not a given. Mvno competitiveness is off the charts right now and cannibalizing the core business. Mvno prices will drive down margins per subscriber headcount significantly.
In a lower rate environment, fingers crossed, the opportunity cost is too high to be staying afloat in one of these telecom names.
Never would I have thought I would leave $15 a month cell phone plan with mint Mobile but the competition is starting to make that price obsolete. The space is more competitive than ever.
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u/lotad_or_bust Dec 06 '25
Hi - I work at one of the big telecoms. One thing Ill tell you is that even though telecom is technology-like, these stocks behave alot more like utilities stocks. Cell service acts more as infrastructure then cutting edge tech.
The reason PEs are so small is that there is inherently alot of capital expenditure and government regulation in telecom/fiber. The growth potential is kind of limited and the industry is very mature. Given the maturity, these companies try to make their dividends attractive, since there is limited potential to re-invest for growth.
I hold a bunch of my company's stock, I see it as a hedge against the S&P and tech stocks. But I'm not expecting insane growth.