Charter: Don't Worry About Q2 Internet Net Add Miss
(Preview) Company Update (CHTR US) (Buy)
Summary
Charter shares lost another 11% last week after poor Q2 net add numbers in U.S. Cable, and have now halved from their peak.
We review Charter numbers from a fresh perspective, and conclude that investors have over-reacted by focusing on the net adds metric.
Internet revenues and EBITDA both grew from Q2. Free Cash Flow also grew, excluding the start of cash taxes and new rural CapEx.
Internet net adds always dipped in Q2 pre-COVID, Fiber is not a threat and Fixed Wireless gains could be explained by natural Cable churn.
At $432.10, Charter is at a Free Cash Flow Yield of about 8% and investors may double their money by 2025 year-end. Buy.
Introduction
Charter Communications Inc. shares lost 11.0% last week (July 25-29), losing 8.4% on Thursday after fellow U.S. Cable leader Comcast (CMCSA) released Q2 2022 results, the day before Charter released its own.
CHTR stock is now down 48% from its peak, wiping out all of its gains since October 2019. Compared to the price at which we initiat…