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Charter Communications (CHTR)
NASDAQ:CHTR
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Charter Communications
(NASDAQ:CHTR)74Outperform
Positive Factors
Financial Performance
Charter generated better-than-expected adjusted EBITDA growth, with a 3.4% increase, largely due to a decline in programming costs.
Mobile Business Growth
Charter is seeing healthy trends in its mobile business, which is probably the biggest opportunity given its low penetration rate today in this $200bn market.
Negative Factors
Broadband Competition
There remains downside risk given intense broadband competition and the risk that results fall short again.
Charter Communications (CHTR) vs. S&P 500 (SPY)
Market Cap
$58.37B
Dividend YieldN/A
Average Volume (3M)1.15M
Price to Earnings (P/E)10.5
Beta (1Y)0.95
Revenue Growth0.88%
EPS Growth16.44%
CountryUS
Employees94,500
SectorCommunication Services
Sector Strength85
IndustryTelecommunications
Share Statistics
EPS (TTM)35.19
Shares Outstanding141,947,890
10 Day Avg. Volume1,066,840
30 Day Avg. Volume1,146,132
Financial Highlights & Ratios
PEG Ratio0.64
Price to Book (P/B)N/A
Price to Sales (P/S)0.96
Price to Cash Flow (P/CF)3.80
P/FCF Ratio13.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$432.21Price Target Upside17.33% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
Charter Communications Business Overview & Revenue Model
Company DescriptionFounded in 1993, Charter Communications, Inc. provides cable and broadband communications services to more than 30 million customers in the United States through its Spectrum brand. The company's services include internet access, data networking, video programming, voice communications, and local advertising services. The company also provides regional sports networks and local sports, news, and original programming to its customers. The company is headquartered in Stamford, Connecticut.
How the Company Makes MoneyCharter Communications generates revenue through several key streams. The primary source of income is subscription fees from its broadband internet services, which are marketed under the Spectrum brand. The company also earns significant revenue from cable television subscriptions, where it provides a variety of channel packages and on-demand content. Additionally, Charter offers mobile services, generating revenue through mobile plan subscriptions and related services. Another revenue stream comes from providing voice services, including landline and VoIP services. Charter Communications also benefits from advertising sales on its cable networks, as well as through partnerships and licensing agreements with content providers. The company's earnings are further supported by its business services division, which offers networking and communication solutions to enterprises, small businesses, and government entities.
Charter Communications Financial Statement Overview
Summary
Charter Communications exhibits strong revenue growth and operational efficiency, particularly in its gross profit and EBIT margins. However, the company carries a high level of debt, which may pose financial risks if not managed carefully. Cash flow remains robust, although the decreasing free cash flow warrants attention. Overall, the financial health of Charter indicates solid performance with some risks related to leverage.Income Statement
Charter Communications has shown strong revenue growth with a consistent increase over the years, up to $55.08 billion in 2024 from $45.76 billion in 2019. The gross profit margin is impressive, with a gross profit equaling total revenue in 2024. However, the net profit margin has room for improvement, standing at 9.22% in 2024. The EBIT and EBITDA margins show solid operational efficiency, with EBIT at 23.82% and EBITDA at 12.49% for 2024.78
Positive
Balance Sheet
The company's debt-to-equity ratio is high due to substantial total debt of $93.933 billion against stockholders' equity of $15.587 billion in 2024, indicating significant leverage which could pose risks. However, return on equity is commendable at 32.6%, showcasing effective utilization of equity. The equity ratio is relatively low at 10.39%, suggesting a heavy reliance on debt.62
Positive
Cash Flow
The operating cash flow remains strong and stable, with a slight decrease in recent years to $14.43 billion in 2024. Free cash flow, although positive, has declined since 2020, standing at $3.161 billion in 2024. The free cash flow to net income ratio is healthy, indicating good cash generation relative to net income.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 55.09B | 54.61B | 54.02B | 51.68B | 48.10B | Gross Profit |
| 30.78B | 21.20B | 21.15B | 23.70B | 21.55B | EBIT |
| 13.12B | 12.56B | 11.96B | 10.53B | 8.40B | EBITDA |
| 21.40B | 20.74B | 20.92B | 19.77B | 18.10B | Net Income Common Stockholders |
| 5.08B | 4.56B | 5.05B | 4.65B | 3.22B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 459.00M | 709.00M | 645.00M | 601.00M | 998.00M | Total Assets |
| 150.02B | 147.19B | 144.52B | 142.49B | 144.21B | Total Debt |
| 93.93B | 97.78B | 97.60B | 91.56B | 82.75B | Net Debt |
| 93.47B | 97.07B | 96.96B | 90.96B | 81.75B | Total Liabilities |
| 130.31B | 132.47B | 131.97B | 124.33B | 113.92B | Stockholders Equity |
| 15.59B | 11.09B | 9.12B | 14.05B | 23.80B |
| Cash Flow | Free Cash Flow | |||
| 3.16B | 3.49B | 6.10B | 8.68B | 6.61B | Operating Cash Flow |
| 14.43B | 14.43B | 14.93B | 16.24B | 14.56B | Investing Cash Flow |
| -10.65B | -11.13B | -9.11B | -7.75B | -8.16B | Financing Cash Flow |
| -3.98B | -3.24B | -5.77B | -8.88B | -8.95B |
Charter Communications Technical Analysis
Positive
368.36
Price Trends
353.20
Positive
360.17
Positive
339.21
Positive
Market Momentum
3.17
Negative
58.16
Neutral
67.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHTR, the sentiment is Positive. The current price of 368.36 is above the 20-day moving average (MA) of 357.18, above the 50-day MA of 353.20, and above the 200-day MA of 339.21, indicating a bullish trend. The MACD of 3.17 indicates Negative momentum. The RSI at 58.16 is Neutral, neither overbought nor oversold. The STOCH value of 67.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CHTR.
Charter Communications Risk Analysis
Charter Communications disclosed 24 risk factors in its most recent earnings report. Charter Communications reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Charter Communications Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $134.23B | 8.57 | 18.92% | 3.45% | 1.78% | 11.62% | |
76 Outperform | $188.21B | 17.58 | 9.26% | 4.00% | -0.08% | -24.48% | |
74 Outperform | $58.37B | 10.47 | 32.61% | ― | 0.88% | 16.44% | |
73 Outperform | $181.44B | 10.40 | -224.44% | 6.12% | 0.61% | 50.39% | |
72 Outperform | $874.17M | 16.28 | 130.82% | ― | -0.79% | -64.40% | |
59 Neutral | $30.54B | 0.25 | -13.23% | 4.04% | 2.36% | -49.53% | |
48 Neutral | $4.88B | ― | -11.85% | ― | -9.95% | 99.47% |
* Communication Services Sector Average
Performance Comparison
CHTR
Charter Communications
378.42
102.09
36.94%
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AT&T
26.22
9.98
61.45%
LUMN
Lumen Technologies
5.16
3.45
201.75%
CMCSA
Comcast
35.56
-5.29
-12.95%
VZ
Verizon
42.84
5.44
14.55%
GOGO
Gogo
7.05
-1.85
-20.79%
Charter Communications Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: 9.43% | Next Earnings Date: Apr 25, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a balanced outlook with significant achievements in mobile growth and political advertising revenue offset by challenges from natural disasters, Internet customer losses, and increased capital expenditures.Highlights
Successful Management of ACP Transition
In 2024, Charter managed the end of the Affordable Connectivity Program, retaining roughly 90% of former ACP customers.
Rapid Growth in Spectrum Mobile
Charter added over 2 million Spectrum Mobile lines in 2024, making it the fastest growing mobile provider in the US.
Revenue and EBITDA Growth
Charter's revenue grew by 1% and full year EBITDA growth accelerated to 3.1%, driven by strong mobile growth and cost efficiency initiatives.
Record Political Advertising Revenue
Fourth quarter advertising revenue grew by 26% due to political revenue growth.
Expansion of Rural Passings
Charter ended the quarter with 813,000 subsidized rural passings, growing by 117,000 in Q4 and nearly 400,000 over the year.
Lowlights
Impact of Natural Disasters
Hurricanes Helene and Milton, and Los Angeles fires led to over 20,000 additional disconnects and reduced Q4 adjusted EBITDA by $35 million.
Internet Customer Losses
Charter lost 177,000 Internet customers in Q4, including 140,000 losses due to the end of ACP.
Decline in Residential Revenue
Residential revenue declined by 0.4%, driven by a 2.2% decline in customers.
Increased Capital Expenditures
Q4 capital expenditures rose to $3.1 billion, driven by rural construction and network expansion.
Company Guidance
In the Charter Communications Fourth Quarter and Full Year 2024 Investor Call, the company provided guidance for 2025 and beyond, highlighting several key metrics and strategic initiatives. Charter managed to maintain approximately 90% of former Affordable Connectivity Program (ACP) customers, despite the program's end, and added over 2 million Spectrum Mobile lines in 2024, marking it as the fastest-growing mobile provider in the U.S. Revenue grew by 1% and full-year EBITDA by 3.1%, driven by mobile growth, cost efficiency initiatives, and political advertising. The company plans for a peak capital investment year in 2025, with total capital expenditures expected to reach approximately $12 billion, including $4.2 billion for line extension and $1.5 billion for network evolution. Charter's strategy includes leveraging its converged connectivity capabilities, enhancing customer service, and implementing AI to improve operational efficiencies. Looking forward, Charter anticipates improved visibility in the broadband market, with customer growth expected from increased rural passings and the continued expansion of its seamless connectivity and entertainment offerings.Charter Communications Corporate Events
M&A TransactionsShareholder Meetings
Charter Communications to Acquire Liberty Broadband
Neutral
Feb 27, 2025
On February 26, 2025, Charter Communications and Liberty Broadband held special meetings where stockholders approved the merger agreement, allowing Charter to acquire Liberty Broadband. This merger is expected to close on June 30, 2027, subject to certain conditions, and will result in Liberty Broadband becoming an indirect wholly owned subsidiary of Charter, potentially impacting the company’s market position and stakeholder interests.
M&A TransactionsBusiness Operations and Strategy
Charter Communications Announces Merger with Liberty Broadband
Positive
Dec 13, 2024
Charter Communications has announced a merger agreement with Liberty Broadband Corporation to consolidate operations through a series of mergers. This merger involves the spin-off of Liberty Broadband’s GCI business and the combination of Charter and Liberty Broadband’s financial operations, resulting in the issuance of new Charter stocks and a reduction in outstanding shares. The merger is expected to have significant financial impacts, including the repayment of Liberty Broadband’s debt and the conversion of preferred stock. This strategic move aims to streamline operations and enhance Charter’s market positioning by consolidating assets and reducing financial liabilities.
Private Placements and FinancingBusiness Operations and Strategy
Charter Communications Enhances Debt Structure and Credit Facility
Positive
Dec 9, 2024
Charter Communications has revamped its credit structure by extending the maturity dates of significant debt portions from 2027 to 2030 and 2031. This strategic move includes a substantial increase in its revolving credit facility and conversions of existing loans, reflecting Charter’s proactive financial management and long-term planning, a key interest for those following stock and financial market shifts.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.