A month has gone by since the last earnings report for Charter Communications, Inc.CHTR . Shares have added about 6.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Charter Communications Disappoints in Q1 Earnings
Charter Communications' net income in the reported quarter was $155 million compared with net income of $179 million in the year-ago quarter (calculated on a pro forma basis). Quarterly earnings per share of $0.57 per share were below the Zacks Consensus Estimate of $0.99.
First-quarter 2017 total revenue of $10,164 million increased 4.3% year over year but missed the Zacks Consensus Estimate of $10,253.4 million.
Residential segment revenues came in at $8,171 million compared with $7,839 million in the year-ago quarter. Within the Residential segment, Video revenues totaled $4,079 million, up 0.1% year over year. Internet revenues came in at $3,398 million, up 11.9% from the prior-year quarter while Voice revenues were $694 million, down 4.8% year over year.
Commercial revenues totaled $1,439 million, up 10.8% year over year. Within the Commercial segment, small and medium business revenues were $900 million, up 11.3% year over year. Enterprise revenues came in at $539 million, up 10.1% on a year-over-year basis.
Advertising revenues were $337 million, down 7.7% year over year. Other revenues came in at $217 million, down 9.7%.
Quarterly operating costs and expenses were $6,510 million compared with $6,309 million in the year-ago quarter. First-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $3,654 million compared with $3,433 million in the year-ago quarter. EBITDA margin came in at 35.9% compared with 35.2% in first-quarter 2016.
In the first quarter of 2017, Charter Communications generated $2,843 million of cash from operations compared with $424 million a year ago. Free cash flow in the reported quarter was $1,138 million.
At the end of Mar 2017, Charter Communications had $2,920 million of cash and cash equivalents and $63,444 million of outstanding debt compared with $1,535 million and $62,464 million, respectively, at the end of Dec 2016.
Residential segment : As of Mar 31, 2017, Charter Communications' residential high-speed Internet subscribers rose by 428,000 to 21.802 million. Voice subscribers grew 37,000 to 10.364 million. However, video subscribers decreased by 100,000 to 16.736 million.
Pro Forma Monthly Residential Revenue per Residential Customer was $109.11 compared with $109 in the prior-year quarter. Single Play penetration was 39.7%, Double Play penetration was 26.0% and Triple Play penetration was 34.3%.
Commercial Segment : As of Mar 31, 2017, Charter Communications had 411,000 video, 1,249,000 high-speed Internet and 809,000 voice subscribers. During the reported quarter, the company added 11,000 video customers, 30,000 high-speed Internet and 31,000 voice customers.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been 11 revisions lower for the current quarter. In the past month, the consensus estimate has shifted down by 28.2% due to these changes.
Charter Communications, Inc. Price and Consensus
At this time, the stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for growth based on our styles scores.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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