Why Charter Shares Sank On Q3 News

By on Nov, 3 2016 with Comments 0

Charter Communications, the home cable, internet and phone services company that in May completed its purchase of Time Warner Cable and Bright House Networks, saw its net revenue climb 7.4% in Q3, from $9.3 billion to $10 billion.

Adjusted EBITDA grew from $3.2 billion to $3.6 billion as net income soared from $2 million (1 cent per diluted share) to $189 million (69 cents per diluted share).

Charter says the revenue gains are driven by the acquisition of TWC and Bright House.

Yet, the gains — which met Wall Street consensus estimates — failed to win over investors on Thursday. Charter stock finished the day down .

Why?

One possible reason is how revenue growth is being achieved.

Internet revenue increased 12.7%, to $3.21 billion.

But video revenue grew by just 3%, to $4.1 billion.

With “cord-cutting” a growing concern at MSOs, the slower growth at the biggest revenue driver could be scaring off shareholders. At the closing bell, CHTR dipped $5.57, to $247.34 — a 2.2% decline.

For Zacks, Charter had a strong Q3, with its quarterly earnings per share of 69 cents well above the Zacks Consensus Estimate of 62 cents per share.

Third-quarter 2016 total revenue of $10.04 billion increased 7.4% year over year, beating the Zacks Consensus Estimate of $10.02 billion.

After peaking Sept. 7 at $277.56, Charter shares have seen some giveback after a highly successful year-long climb from $177.53 per share.

About The Author: Adam R Jacobson is a veteran radio industry journalist and advertising industry analyst with general, multicultural and Hispanic market expertise. From 1996 to 2006 he served as an editor at Radio & Records.

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