Shares of Charter Communications (CHTR 2.01%) were soaring after the nation's No. 2 cable company and owner of the Spectrum brand posted better-than-expected results in its second-quarter earnings report, even as it continues to lose broadband subscribers.
As a result, the stock was up 16.5% as of 10:46 a.m. ET.
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Charter manages a challenging market
Charter said that total internet customers, which include both residential and business customers, fell by 149,000 to 30.4 million, while revenue ticked up 0.2% to $13.7 billion, ahead of the consensus at $13.6 billion. However, the company's mobile business increased by 557,000 to 8.8 million mobile lines.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 2.6% to $5.7 billion, and earnings per share improved from $8.05 to $8.49, thanks to help from share buybacks, beating estimates at $7.98. During the quarter, the company repurchased 1.5 million shares for $404 million, reducing shares outstanding by roughly 1%.
CEO Chris Winfrey said, "We are executing well on several transformational initiatives, growing EBITDA through efficiencies, and improving our service and sales capabilities."
What's next for Charter
While a competitive broadband market is weighing on core subscriber growth, the company is having some success expanding in rural markets, benefiting from a government program to expand broadband access in rural areas, and with its push into mobile.
Charter didn't offer guidance in its earnings release, but the stock is cheap enough, at a price-to-earnings ratio of 12, that it could move higher with only modest profit gains, especially as the company continues its share buybacks. While Charter doesn't have a dividend, it looks like a decent value stock at the moment, especially if it can shore up the decline in broadband subscribers.
