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Why Charter Communications Is Popping Today

By Daniel Miller - Updated Apr 24, 2019 at 11:52PM

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Shares of Charter Communications have popped on a strong top-line result, despite the bottom line missing estimates. Here's what investors need to know.

What happened?

Shares of Charter Communications (CHTR 2.64%), a leading broadband communications company and the second-largest cable operator in the U.S., are up 15% as of 11:45 AM EST Thursday as strong fourth-quarter revenue fuels investor optimism.

CHTR Chart

CHTR data by YCharts.

So what

Fourth-quarter revenue increased 5.9% to $11.23 billion compared to the prior year, thanks to residential revenue growth of 3.9%, commercial revenue growth of 4.5%, and impressive advertising revenue growth of 34.1%. Charter's fourth-quarter revenue topped estimates calling for $11.14 billion. On the bottom line, Charter reported net income of $296 million, or $1.29 per share, which fell short of analysts' estimates calling for $1.47 per share.

Man holding television remote with TV in background.

Image source: Getty Images.

"We performed well in 2018, growing our Internet customer base by 1.3 million, cable revenue by 4.7%, and cable Adjusted EBITDA by 6.5% -- very strong operating and financial performance, particularly in the midst of what we believe is the largest cable integration ever," said Tom Rutledge, chairman and CEO of Charter Communications, in a press release.

Now what

Other positive takeaways for investors were that residential/SMB customer relationships rose by 248,000, compared to the prior year's gain of only 209,000, and residential internet adds checked in at 289,000, higher than the anticipated 275,000 adds. On the flip side, video declines of 36,000 and phone declines of 83,000 were slightly worse than expected. Despite the mixed fourth quarter, management remains confident that its cable business's operating and cash flow performance will only improve in 2019 thanks to its recent network investments. All in all, it was a positive development to see strong revenue and customer relationships during the fourth quarter, but investors would be wise to keep their long-term thesis fresh as consumers continue to cut the cord and challenges remain

Check out the latest Charter Communications earnings call transcript.

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Charter Communications, Inc. Stock Quote
Charter Communications, Inc.
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