What Does Charter’s Current Valuation Tell Us?
As of September 12, 2017, AT&T (T) was the largest US telecom company, with a market capitalization of ~$222.6 billion, followed by Verizon Communications (VZ) at ~$190.9 billion. Charter (CHTR) has a market capitalization of ~$113.7 billion.
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In the September 12 trading session, Charter stock closed at $381.57—near its lower Bollinger Band level of $382.00. This indicates that Charter’s stock is oversold.
Charter’s forward EV-to-EBITDA and forward PE
On September 12, Charter was trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of ~11.1x, which is higher than AT&T’s and Sprint’s (S) multiples of ~6.4x and ~5.5x, respectively.
On the same date, Charter was trading at a forward PE (price-to-earnings) multiple of ~50.2x, which is higher than AT&T’s and Verizon’s multiples of ~12.12x and ~12.21x, respectively.
Short interest ratio
As of September 12, 2017, Charter’s short interest as a percentage of its float (or short interest ratio) was ~4.5%. Normally, when a stock’s short interest ratio is higher than 40%, it means that investors expect a correction in the stock’s price.