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Charter Communications Inc Class A CHTR

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Charter Posts Strong Profitability as Customer Growth Slows During Q2

Analyst Note

| Michael Hodel, CFA |

Charter Communications' customer growth was in line with our expectations during the second quarter, but revenue per customer is tracking higher than our forecast. Profitability was also stronger than anticipated. Management continues to believe that customer growth will accelerate in the coming quarters, causing marketing, installation, and customer service costs to increase, pressuring margins. Even with that consideration, our margin expectations have been a bit too low. With increased pricing and margin assumptions, our fair value estimate increases to $600 per share from $565. Despite the increase, we believe the shares remain modestly overvalued.

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Company Profile

Business Description

Charter is the product of the 2016 merger of three cable companies, each with a decades-long history in the business: Legacy Charter, Time Warner Cable, and Bright House Networks. The firm now holds networks capable of providing television, Internet access, and phone services to roughly 54 million U.S. homes and businesses, around 40% of the country. Across this footprint, Charter serves 29 million residential and 2 million commercial customer accounts under the Spectrum brand, making it the second- largest U.S. cable company behind Comcast. The firm also owns, in whole or in part, sports and news networks, including Spectrum SportsNet (long-term local rights to Los Angeles Lakers games), SportsNet LA (Los Angeles Dodgers), SportsNet New York (New York Mets), and Spectrum News NY1.

400 Atlantic Street
Stamford, CT, 06901
T +1 203 905-7801
Sector Communication Services
Industry Entertainment
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Slow Growth
Employees 96,100