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Charter (CHTR) to Report Q3 Earnings: What's in the Cards?

Charter Communications CHTR is set to report third-quarter 2020 results on Oct 30.

The Zacks Consensus Estimate for third-quarter 2020 revenues is pegged at $12.04 billion, indicating a 5.2% increase from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings has moved up 0.7% to $3.05 over the past 30 days, suggesting growth of 75.3% from the figure reported in the year-ago quarter.

Notably, Charter beat on earnings in three of the trailing four quarters, missing the same in one, the average negative surprise being 13.86%.

Charter Communications, Inc. Price and EPS Surprise

Charter Communications, Inc. Price and EPS Surprise

Charter Communications, Inc. price-eps-surprise | Charter Communications, Inc. Quote

Factors to Consider

Charter’s top line in the to-be-reported quarter is expected to have benefited from an increased number of Internet subscribers amid the coronavirus induced social distancing norms. Increased media consumption and work-from-home wave are expected to have augured well for this cable giant.

Notably, the company had 26.313 million residential Internet customers, up 8.5% year over year in second quarter. Internet revenues grew 10.4% year over year to $4.53 billion.

The Zacks Consensus Estimate for Residential-Internet revenues is pegged at $4.66 billion, indicating 11.1% growth from the figure reported in the year-ago quarter. The consensus mark for Internet subscribers is pegged at 26.587 million, implying 8.1% year-over-year subscriber growth.

Charter’s expanding mobile subscriber base is also a key catalyst. The consensus mark for third-quarter mobile revenues stands at $348 million, indicating a surge of 81.3% from the figure reported in the year-ago quarter.

However, Charter persistently suffers video-subscriber attrition, primarily due to cord-cutting and stiff competition from streamers like Netflix, Disney+ and Amazon prime video. Rising job losses due to coronavirus are expected to have intensified cord-cutting, while subscription dues are expected to have shot up.

The Zacks Consensus Estimate for Video revenues is pegged at $4.39 billion, almost unchanged from the figure reported in the year-ago quarter.

Notably, small and medium-sized businesses are the worst hit by the coronavirus and Charter’s substantial exposure (roughly 2 million customers) to this cohort is expected to have negatively impacted its top-line growth in the to-be-reported quarter.

Weakness in SMB is also expected to have hurt Charter’s advertising business. The Zacks Consensus Estimate for advertising sales is pegged at $340 million, implying 13.7% decline from the figure reported in the year-ago quarter.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Charter has an Earnings ESP of -0.27% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Alphabet GOOGL has an Earnings ESP of +7.40% and carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard, Inc ATVI has an Earnings ESP of +3.29% and a Zacks Rank #2.

Take Two Interactive Software TTWO has an Earnings ESP of +7.51% and is Zacks #3 Ranked.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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