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Charter Stock Is Still a Big Winner for Investors


Sep. 4 2020, Updated 6:52 a.m. ET

Charter Communications (NASDAQ:CHTR) has been a big winner for investors in the pay-TV and broadband space. The stock closed at $41.29 on Tuesday, which represents a gain of 11% YTD (year-to-date). Notably, Charter stock is far ahead of cable rivals Altice USA (NYSE:ATUS) and Comcast (NASDAQ:CMCSA). Their stocks have gained about 6% and 3% YTD, respectively.

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Charter stock rose due to strong earnings

Charter generated revenue of $11.8 billion in the fourth quarter, which grew 4.7% year-over-year. The revenue beat the consensus estimate by more than $51 million. The company posted an EPS of $3.28, which increased from $1.29 a year ago and beat the consensus estimate at $2.38. The broadband business’s strong performance lifted the results.

Charter stock has gained more than 4.0% since the company reported the results on January 31.

Spectrum Mobile sees steady growth

Charter is one of the big US cable companies that has diversified into the wireless market. The company sells mobile phone services. Charter provides wireless services under the Spectrum Mobile brand, which launched in September 2018. Despite battling it out with wireless giants like AT&T (NYSE:T), Spectrum Mobile is growing steadily. The brand added 948,000 subscribers in 2019 to wrap up the year with a total of 1.1 million customers. Charter offers the Spectrum Mobile service within its footprint.

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The other big cable companies that have also ventured into the business of providing wireless services are Comcast and Altice. Comcast provides wireless phone service under the Xfinity Mobile brand. The service launched in April 2017 and has signed up 2.1 million subscribers. Altice provides wireless services under the Altice Mobile brand, which launched in September 2019. Altice Mobile generated $18 million in revenue in the fourth quarter and finished 2019 with 69,000 customers.

Meanwhile, Charter stock has risen more than 70% since the Spectrum Mobile debut.

Investing in shareholders through stock repurchase

Charter has been regularly repurchasing its shares and returning billions of dollars to shareholders. In the fourth quarter, the company repurchased 5.6 million shares. Charter put $2.6 billion back in shareholders’ pockets. The company repurchased 19 million shares in 2019 and returned a total of $7.6 billion to shareholders.

The company plans to return more cash to its shareholders. Recently, Charter raised $1.7 billion through a bond sale. The company intends to use the proceeds from the bond sale to repay some existing debt and to fund stock repurchases.

Charter stock rose 54% over the past 12 months. Altice and Comcast stock rose 35% and 22% during the same period, respectively.


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