Charter Communications Delivers Mixed Q4 Results; Shares Jumps 5%

Charter Communications (CHTR) delivered solid fourth-quarter results characterized by solid customer growth and strong financial growth. While earnings per share convincingly beat consensus estimates, revenue missed expectations. CHTR shares jumped 5.25% to close at $590.47 on January 28.

Charter Communications is a cable and broadband company that offers internet access, data networking, voice communication, and local advertising services.

Financial Results

Revenue in the quarter increased 4.7% year-over-year to $13.2 billion, slightly below consensus estimates of $13.25 billion. The increase was driven by a 5.1% increase in residential revenue and 47.5% growth in mobile revenue. However, the increase was partially offset by a 28.2% decline in advertising sales revenue. For the full year, revenue was up 7.5% year-over-year to $51.7 billion.

Fourth-quarter adjusted EBITDA landed at $5.4 billion, representing 7.7% year-over-year growth. Diluted earnings per share in the quarter landed at $8.93, better than analysts’ estimates of $6.96.

During the quarter Charter Communications repurchased 7.6 million shares of common stock for approximately $5.3 billion. The company repurchased 25.3 million shares during the year for $17.3 billion.

Chief Executive Officer Tom Rutledge says the focus is on driving additional customer growth by offering better services. In addition, driving EBITDA growth, free cash flow growth, and shareholder value is top on the agenda.

Stock Rating

Last week, Pivotal Research analyst Jeffrey Wlodarczak reiterated a Buy rating on the stock and cut the price target to $750 from $800, implying 27.02% upside potential to current levels. According to the analyst, 4G/5G networks don’t pose a significant threat to the company as it develops its fiber network.

Consensus among analysts is a Moderate Buy based on 6 Buys, 7 Holds, and 2 Sells. The average Charter Communications price target of $700.93 implies 18.71% upside potential to current levels.

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