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Charter Communications Inc A CHTR

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Morningstar’s Analysis

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Charter Posts Relatively Slow Customer Growth but Strong Margins in Q1; FVE to $565

Analyst Note

| Michael Hodel, CFA |

Charter posted modestly disappointing customer growth during the first quarter, but the general trajectory of the business remains well within our expectations. Slower customer growth provided a nice lift to margins and cash flow, but management clearly expressed that it would have gladly invested more in customer acquisition if additional opportunities were present. The firm expects increased customer activity in the second half of the year as the pandemic eases. We’re increasing our fair value estimate to $565 from $545, primarily reflecting cash earned during the quarter. We continue to view Charter shares as overvalued, preferring Comcast among U.S. cable stocks.

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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 Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Slow Growth
Employees 96,100