Credit: Shutterstock photoSummary:
We reiterate our long-trm Neutral recommendation on Charter Communications. The company reported mixed financial results for the second quarter of 2014. While net income significantly fell below the Zacks Consensus Estimate, total revenue was in line with the same. Unlike most of the cable TV operators, the company improved its video, Internet and telephony subscribers churn rate year-over-year in the reported quarter and its average revenue per user also increased 1.93% year over year. Digital penetration rate was 96.1%. We believe that Charter Communications recent agreement to take over cable TV customers from Comcast will significantly benefit the company over the long-term. Meanwhile, the stock price has soared more than 33% in the last year and is currently trading at the high-end of 52-week price range. We believe that Charter Communications is fairly valued at this stage.
Overview:
Founded in 1999, Charter Communications Inc. is a leading cable MSO (multi service operator) in the U.S. and is headquartered in Stamford, Connecticut. Charter Communications offers triple-play cable video programming, high-speed broadband (Internet) and voice (telephony) services to both residential and commercial customers. The company also provides advanced services such as, video-on-demand, high definition television (HDTV) and digital video recorder (DVR). The products are primarily sold on a subscription basis to its customers. The company offers Charter TV Applications, which enable video customers to search and discover content on various devices, including the iPhone, iPad, iPod Touch, and Android-based tablets. Additionally, Charter Communications also sells local advertising on cable networks and the Internet and provides backhaul fiber connectivity to wireless towers.
Charter Communications operates through six reportable segments such as:
Residential Video: This segment comprises revenues from basic and digital video services provided to the company's residential customers, as well as franchise fees, equipment rental and video installation revenues. The segment accounted for 49.3% of the total revenue in the first half of 2014.
Residential Internet: This segment offers high-speed broadband Internet services to residential customers and accounted for nearly 28.1% of the total revenue in the first half of 2014.
Residential Voice: This segment offers telephony services to residential customers and generated over 6.6% of the total revenue in the first half of 2014.
Commercial: This segment consists of revenues from services offered to commercial (business enterprises) customers. The segment accounted for over 10.7% of the total revenue in the first half of 2014.
Advertising: This segment generates revenues from commercial advertising customers, programmers and other vendors and accounted for nearly 3.3% of the total revenue in the first half of 2014.
Other: Other revenues consist of home shopping, late payment fees, wire maintenance fees and other miscellaneous revenues. The segment generated the remaining 2% of the total revenue in the first half of 2014.
Charter Communications Inc. (CHTR): Read the Full Research Report
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CHARTER COMM-A (CHTR): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
