Comcast Inc. (CMCSA) shares gained in trading Thursday, recently up 2%, after the country's leading cable company posted fourth-quarter earnings and revenue that surpassed Wall Street expectations.

For its fourth quarter, Comcast reported earnings of $0.89 a share, which was higher than the $0.87 a share analysts were looking for. Revenue came in at $21.03 billion, which also surpassed the $20.67 billion Wall Street had expected. In the year-ago fourth quarter, Comcast reported EPS of $0.81 a share and revenue of $19.25 billion. In conjunction with the earnings report, Comcast hiked its dividend by 15% and disclosed a 2-for-1 stock split.

“Our performance at Comcast Cable was exceptionally strong. We grew operating cash flow 5.6%, added 161,000 video subscribers, the best video customer results in a decade, and delivered our best high-speed Internet customer results in nine years,” Comcast Chief Executive Brian Roberts said in a press release announcing quarterly financial results. “NBCUniversal also had a terrific year, fueled by the tremendous success of the Olympics, the opening of new attractions at our theme parks, and strong theatrical performances, particularly in animation.” Roberts noted that the “consistency and strength” of the cable operator’s results has enabled it to raise its dividend by 15%, split its stock, the 12th time it has done so, and repurchase $5 billion of its stock this year. At NBCUniversal, revenue during the fourth quarter increased 13% while revenue in its cable business jumped 7% from a year ago.  “As we begin 2017, we are well positioned to continue driving growth and shareholder value as we embark on the opportunities ahead,” Roberts added.

Stock Buybacks, Dividend Hike Was Expected

Heading into Comcast’s earnings report, expectations were increasing that the cable operator could boost its dividend and engage in share buybacks​. Jefferies analyst Mike McCormack was spot on in a research report issued earlier in the week in which he said Comcast should keep its share repurchases steady at $5 billion a year and forecast that the cable operator could raise its dividend by double digits. The analyst raised his price target on Comcast’s stock to $80 a share from $77. With shares currently trading at $75.53, the analyst is predicting the stock will climb around 6% more in 2017. (Read more: Comcast Could Buy Back More Shares, Make a Buy.)

The one negative for Comcast is how it will fare against new competition from streaming video services. With more people cutting the cord, particularly Millennials, cable companies need to respond or risk losing subscribers. Comcast’s CFO Mike Cavanaugh said as much at a recent conference, saying the competition from streaming content providers is forcing Comcast to think beyond its traditional cable business to reach younger viewers who are more inclined to watch their TV shows and movies via a mobile device than a tethered set-top box. The CFO went on to say an online TV service is coming but wouldn’t provide a time frame. (See also: Comcast Gears Up for Its Own Online TV Service.)

 

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.