Charter (CHTR) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research
·4-min read

Charter Communications CHTR is set to report fourth-quarter 2020 results on Jan 29.

The Zacks Consensus Estimate for fourth-quarter 2020 revenues is pegged at $12.56 billion, indicating a 6.8% increase from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings has moved up 0.2% to $4.93 over the past 30 days, suggesting growth of 46.2% 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 19.62%.

Charter Communications, Inc. Price and EPS Surprise

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 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 26.807 million residential Internet customers, up 1.9% year over year in the third quarter. Internet revenues grew 12.5% year over year to $4.7 billion.

The Zacks Consensus Estimate for Residential-Internet revenues is pegged at $4.85 billion, indicating 11.6% growth from the figure reported in the year-ago quarter. The consensus mark for Residential-Internet subscribers is pegged at 27.151 million, implying 9% year-over-year subscriber growth.

In the to-be-reported quarter, Charter’s Spectrum Enterprise announced that Spectrum has doubled the starting download speed of Spectrum Internet from 100 to 200 Mbps, reaching approximately 8 million additional homes across 17 U.S. markets.

Moreover, Charter’s expanding mobile subscriber base is also a key catalyst. The consensus mark for fourth-quarter mobile revenues stands at $433 million, indicating a surge of 83.5% from the figure reported in the year-ago quarter.

On Oct 16, Charter’s Spectrum Enterprise announced expansion of 5G coverage nationwide. Spectrum Mobile is offering the entire iPhone 12 line-up from Apple AAPL, including iPhone 12 Pro, iPhone 12 Pro Max, iPhone 12, and iPhone 12 mini, with 5G.

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 $4.46 billion, indicating a decline of 0.2% from the figure reported in the year-ago quarter.

Notably, small and medium-sized businesses are the worst hit by the coronavirus. 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.

Nonetheless, partial easing of social norms and resumption of business operations in SMB are expected to have benefited Charter’s recovering advertising business. The Zacks Consensus Estimate for advertising sales is pegged at $481 million, implying 10.8% growth 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 -0.54% 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:

Qorvo, Inc. QRVO has an Earnings ESP of +0.78% and carries a Zacks Rank of 2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mattel, Inc. MAT has an Earnings ESP of +1.24% and a Zacks Rank #3.

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