Charter Communications (NASDAQ:CHTR) Releases Earnings Results, Misses Estimates By $29.40 EPS

Key Points

• Charter reported a GAAP loss of $20.50 per share, missing the $8.90 consensus estimate, largely due to a $6.33 billion franchise impairment. Revenue was $14.92 billion, above estimates, while adjusted EPS was reported elsewhere in the article as beating expectations.
• Broadband subscriber losses worsened: Legacy Charter lost 156,000 internet customers, amid intense competition, while pro forma revenue fell 1.5% and adjusted EBITDA declined 4%.
• Management announced an operating overhaul and is targeting $2 billion in additional annualized cost savings over 18 months. It also expects 2027 capital expenditures of $11 billion or less, while aiming to reduce leverage and grow free cash flow over time.

Charter Communications (NASDAQ:CHTR - Get Free Report) issued its earnings results on Friday. The company reported ($20.50) EPS for the quarter, missing the consensus estimate of $8.90 by ($29.40), FiscalAI reports. The business had revenue of $14.92 billion for the quarter, compared to the consensus estimate of $13.50 billion. Charter Communications had a net margin of 9.05% and a return on equity of 23.71%. The business's revenue was up 9.1% on a year-over-year basis. During the same quarter in the previous year, the firm posted $8.34 EPS.

Here are the key takeaways from Charter Communications' conference call:

• Charter announced an end-to-end operating overhaul focused on winning more internet customers, improving service and reducing churn, while simplifying its offers and organization. Management says it aims to grow customer connections while maintaining ARPU, but gave no timeline for returning to growth.
• Core results remained pressured: Legacy Charter lost 156,000 internet customers, compared with 109,000 a year earlier, while pro forma revenue fell 1.5% and adjusted EBITDA declined 4% (3% excluding Cox transition costs). The company attributed subscriber weakness to intense competition and lower connects.
• Since Spectrum Day launched in Cox’s markets on September 16, management says Cox’s internet loss run rate has been cut in half, with mobile-line additions also improving. Cox remains under-penetrated, though its internet churn is still higher than Charter’s.
• Charter is targeting an additional $2 billion in annualized operating expense savings over 18 months, on top of more than $1 billion in expected Cox transaction synergies. Management also expects 2027 capital expenditures of $11 billion or less, supporting its outlook for higher free cash flow over time.
• Debt principal was $109 billion and leverage stood at 3.93x at quarter-end; Charter targets 3.5x within three years and expects most fourth-quarter free cash flow to go toward debt reduction. Management also plans some share repurchases, aiming to balance debt paydown with equity returns.

Charter Communications Stock Down 6.2%

Shares of CHTR stock traded down $7.79 on Friday, reaching $118.07. 6,463,288 shares of the company were exchanged, compared to its average volume of 2,811,300. The company has a market cap of $14.08 billion, a price-to-earnings ratio of 3.07, a PEG ratio of 0.25 and a beta of 0.73. The company has a 50-day moving average of $121.54 and a 200-day moving average of $163.66. The company has a debt-to-equity ratio of 4.32, a current ratio of 0.36 and a quick ratio of 0.36. Charter Communications has a one year low of $101.11 and a one year high of $254.11.

Wall Street Analysts Forecast Growth

Several research analysts have recently weighed in on CHTR shares. JPMorgan Chase & Co. reduced their price objective on Charter Communications from $200.00 to $150.00 and set a "neutral" rating for the company in a research report on Wednesday, July 29th. Morgan Stanley decreased their price objective on shares of Charter Communications from $150.00 to $140.00 and set an "equal weight" rating on the stock in a research note on Friday, September 25th. Wells Fargo & Company dropped their target price on shares of Charter Communications from $160.00 to $101.00 and set an "underweight" rating for the company in a report on Monday, July 27th. Wolfe Research lowered shares of Charter Communications from a "peer perform" rating to an "underperform" rating and set a $118.00 target price on the stock. in a report on Monday, September 14th. Finally, BNP Paribas Exane cut their price objective on Charter Communications from $150.00 to $120.00 and set an "underperform" rating on the stock in a research note on Tuesday, July 14th. Five equities research analysts have rated the stock with a Buy rating, nine have issued a Hold rating and seven have assigned a Sell rating to the company. According to data from MarketBeat.com, the company presently has an average rating of "Reduce" and a consensus target price of $200.18.

More Charter Communications News

Here are the key news stories impacting Charter Communications this week:

• Positive Sentiment: Charter reported Q3 revenue of $14.92 billion, above estimates, and adjusted EPS of $21.70, also ahead of consensus. Revenue growth was aided by the Cox acquisition. Charter Communications tops Q3 earnings and revenue estimates
• Positive Sentiment: The company launched a new operating model aimed at returning to growth, improving its internet offerings, and using mobile and video services to attract customers. Management’s plan includes about $2 billion in cost cuts, which could help profitability if executed. Charter announces Q3 results and launches new operating model
• Negative Sentiment: Broadband customer losses worsened in Q3, overshadowing the earnings and revenue beats. Investors are concerned that competition is making it harder for Charter to stabilize its core internet business. Charter’s cost-cutting plan is overshadowed by subscriber losses
• Negative Sentiment: A $6.33 billion franchise impairment drove a reported GAAP loss of $20.50 per share, creating a sharp contrast with the adjusted earnings beat. The impairment and declining cash flow added to concerns about the quarter’s underlying performance. Charter Q3 earnings beat on debt gain amid franchise impairment

About Charter Communications

Charter Communications, Inc is a telecommunications and broadband services company that operates under the Spectrum brand. The company provides internet access, video entertainment, mobile communications and voice services to residential customers, as well as connectivity, data networking, cloud, security and other communications solutions to businesses and government organizations.

Charter operates one of the largest broadband networks in the United States, serving customers across dozens of states.

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