How Charter’s Valuation Looks for Long-Term Investors



Charter’s scale

As of December 12, Verizon (VZ) was the largest US telecommunications company by market cap at $236.6 billion, followed by AT&T (T) at $219.5 billion. Meanwhile, Charter Communications (CHTR) had a market cap of $72.5 billion.

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Valuation metrics for Charter

Valuation metrics include price-based multiples and earnings-based multiples. On December 12, Charter had a trailing-12-month EV-to-EBITDA (enterprise value-to-EBITDA) multiple of ~9.8x. Its close peers AT&T, Verizon, Sprint (S), and T-Mobile (TMUS) had trailing-12-month EV-to-EBITDA multiples of ~7.4x, ~7.5x, ~4.7x, and ~7.5x, respectively.

Charter expects its EV-to-EBITDA multiple in 2018 to be ~9.6x, while in 2019, its multiple is expected to be ~9.1x. Charter is now trading at a PE multiple of ~56x. In 2018, its PE multiple is expected to reach ~57.6x, while in 2019, it’s expected to be ~41.9x.

Short interest ratio

As of December 12, Charter stock’s short interest as a percentage of its float (or short interest ratio) was ~6.1%. A short interest ratio of more than 40% denotes that investors and traders foresee a fall in a stock’s price.


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