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Changes to Charter’s Valuation after Q3 2018 Results

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Charter’s scale

As of October 29, Verizon (VZ) was the largest US telecommunications company by market capitalization of $233.4 billion, followed by AT&T (T) at $215.3 billion. Charter Communications (CHTR) had a market capitalization of $68.9 billion, as you can see in the chart below.

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Bollinger Band

In the October 29 trading session, Charter stock closed at $300.85, which was near its lower Bollinger Band level of $298.04. That means Charter stock is oversold.

Valuation metrics for Charter

Valuation metrics include price-based multiples and earnings-based multiples. On October 29, Charter had a trailing-12-month EV[1. enterprise value]-to-EBITDA multiple of ~9.5x. Its closest rivals AT&T, Sprint (S), Verizon, and T-Mobile (TMUS) had trailing-12-month EV-to-EBITDA multiples of ~7.4x, ~4.8x, ~7.4x, and ~7.7x, respectively.

Charter expects its EV-to-EBITDA multiple in 2018 to be ~9.3x. It expects it to be ~8.9x in 2019. Charter is now trading at a PE multiple of ~53.2x. In 2018, that multiple is expected to be ~57.2x, and in 2019, it’s anticipated at ~41.1x.

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