Please ensure Javascript is enabled for purposes of website accessibility

Charter Communications, Inc. Jumped on Earnings: What You Need to Know

By Anders Bylund - Jul 28, 2017 at 8:09PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The second-largest cable company in America reported solid second-quarter results and outlined a sensible growth strategy. Investors loved it.

Earlier this week, Charter Communications (CHTR 2.56%) reported second-quarter earnings to a standing market ovation. The cable broadcaster's share prices rose as much as 6.4% the next day and closed 5.2% higher.

Here's how Charter earned those quick gains for its shareholders.

By the numbers


Q2 2017 Result

Q2 2016 Result

Growth (YOY)


$10.4 billion

$10.0 billion


Residential customers

25.3 million

24.3 million


Net income attributable to shareholders

$139 million

$248 million


Adjusted EBITDA profits

$3.8 billion

$3.5 billion


GAAP earnings per share (Diluted)




Data source: Charter Communications, using non-GAAP figures for 2016 to account for the acquisition of Time Warner Cable and Brighthouse markets. YOY = year over year.

Adjusted EBITDA is a non-GAAP financial metric that Charter and other cable operators like to present as a close approximation of operating results without the financial trappings of debt service and pension plans, among other things. It is calculated from net income, backing out items like interest expenses, income taxes, stock-based compensation, gain or loss on financial instruments (warrants, options, stock holdings, and such), depreciation, amortization, and special or one-time line items.

Charter's residential segment added 231,000 net new internet subscribers and 14,000 voice customers in the second quarter, while the number of video customers fell by 90,000.

In the small and medium business division, all three service types posted modest net additions. The video business grew by 14,000 clients, 36,000 names were added to the internet list, and another 38,000 customers signed up for Charter's business-class voice services. Four new enterprise clients also came knocking, bringing the total count in that category to 103.

In other words, Charter is attracting a solid volume on new business-class clients while consumers are moving out of video services and into broadband internet contracts. This is a common story all around the cable and telecom sectors nowadays, and not at all unique to Charter.

Coaxial cable, strippped as if preparing for a new connection.

Image source: Getty Images.

What's next?

The company does not engage in presenting financial guidance, but management certainly spent plenty of time discussing the near future on the earnings call.

Recent changes to Charter's service pricing under the new Spectrum brand should drive average revenues per customer higher over the next few quarters. Charter CEO Tom Rutledge presented this as a win-win for his company and its customers.

"More of our customers are getting better products with better and consistent pricing, which will drive higher customer satisfaction, lower churn and greater value into our business," Rutledge said.

The company is preparing to launch a wireless service next year using rebranded connections from Verizon Communications (VZ 0.83%) and Comcast (CMCSA 1.52%), and Charter is also planning to offer broadband and video services over a fixed 5G wireless network at some undefined point in the future. The times, they are a-changin', and Charter is trying its best to keep up.

Charter shares have now gained 54% over the last 52 weeks. The Time Warner Cable and Brighthouse transactions scaled up the company's revenues and cash flows in a hurry, and the stock also trades at historically high price to cash flow ratios. Investors like what they see in the nation's second-largest cable provider, and I'd say it's for good reason. Charter is doing alright.

Anders Bylund has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Charter Communications, Inc. Stock Quote
Charter Communications, Inc.
$478.12 (2.56%) $11.93
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
$45.15 (0.83%) $0.37
Comcast Corporation Stock Quote
Comcast Corporation
$40.00 (1.52%) $0.60

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.