Why Charter Shares Sank On Q3 News


Charter Communications, the home cable, internet and phone services company that in May completed its purchase of Time Warner Cable and Bright House Networks, saw its net revenue climb 7.4% in Q3, from $9.3 billion to $10 billion.

Adjusted EBITDA grew from $3.2 billion to $3.6 billion as net income soared from $2 million (1 cent per diluted share) to $189 million (69 cents per diluted share).

Charter says the revenue gains are driven by the acquisition of TWC and Bright House.

Yet, the gains — which met Wall Street consensus estimates — failed to win over investors on Thursday. Charter stock finished the day down .


One possible reason is how revenue growth is being achieved.

Internet revenue increased 12.7%, to $3.21 billion.

But video revenue grew by just 3%, to $4.1 billion.

With “cord-cutting” a growing concern at MSOs, the slower growth at the biggest revenue driver could be scaring off shareholders. At the closing bell, CHTR dipped $5.57, to $247.34 — a 2.2% decline.

For Zacks, Charter had a strong Q3, with its quarterly earnings per share of 69 cents well above the Zacks Consensus Estimate of 62 cents per share.

Third-quarter 2016 total revenue of $10.04 billion increased 7.4% year over year, beating the Zacks Consensus Estimate of $10.02 billion.

After peaking Sept. 7 at $277.56, Charter shares have seen some giveback after a highly successful year-long climb from $177.53 per share.