Charter: Stability In Q3 Results, 10%+ Free Cash Flow Yield

(Preview) Company Update (CHTR US) (Buy)

Summary

• Charter's Q3 results on Friday sent its share price up another 3.7%, but shares remain 55% down from their peak in September 2021.

• Despite macro headwinds, Internet revenues grew both year-on-year and sequentially; Free Cash Flow grew 5% excluding one-offs.

• Internet net adds returned to positive in Q3, and churn stayed historically low, despite even larger rival Fixed Wireless net adds.

• Charter shares have a 10% Free Cash Flow Yield, and management is sticking with their accretive leverage and buyback policies.

• With shares at $368.24, we expect an exit price of $1,000 and a total return of 172% (37.1% annualized) by 2025 year-end. Buy.

Introduction

Charter Communications Inc. released its Q3 2022 results on Friday (October 28). CHTR stock closed up 3.7%, having already gained 3.0% the day before when Q3 results from Comcast were also well-received.

Charter shares remain 43% down year-to-date and 55% down from their peak in September 2021. Compared to the price at which we initiated ou…