Why Comcast Stock Sank Today

Key Points

• Comcast stock fell in response to Charter Communications' second-quarter report.

• Charter's report arrived with a bigger-than-expected loss and large decline for its internet-subscriber count.

• Investors are concerned that Comcast's internet business could face some of the same headwinds impacting Charter.

• 10 stocks we like better than Comcast ›

Comcast (NASDAQ: CMCSA) stock sold off in Friday's trading despite gains for the broader market. The company's share price closed out the session down 4.8% and had been off as much as 6.1% early in the session. The S&P 500 (SNPINDEX: ^GSPC) ended the day up 0.4%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up 0.2%.

Charter Communications published its second-quarter report before the market opened this morning, and the report prompted a dramatic sell-off for the stock that had ripple effects for Comcast and other telecom players. Charter stock ended the day's trading down 18.5%.

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Charter's Q2 report sank Comcast stock today

Charter reported earnings per share of $9.18 on sales of $13.77 billion. While the company's sales were in line with the market's target, earnings came in $0.48 per share lower than expected. Adding another big bearish pressure, the company lost 111,000 non-small-business internet customers -- which was far worse than the average analyst estimate's target for 73,250 customers lost in the period. With Comcast operating in the same service category, investors are worried that an industrywide trend could weigh on its results.

What's next for Comcast?

Following today's sell-off in response to Charter's numbers, Comcast's internet subscriber performance will be under the microscope when the company publishes its own second-quarter results before the market opens on July 31.

Charter's report does suggest that some of the same headwinds could show up in Comcast's subscriber trends, but the latter company is more diversified and has been making some smart moves that could help offset some weakness in internet subscribers. With the stock down 10% year to date and trading at a price-to-earnings (P/E) ratio of 7.8, the company deserves a look from value-oriented investors.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.