Charter (CHTR) to Report Q3 Earnings: What's in the Cards?
Charter's (CHTR) third-quarter results are expected to reflect strength in the Internet and mobile subscriber base.
Charter Communications CHTR is set to report third-quarter 2021 results on Oct 29.
The Zacks Consensus Estimate for third-quarter 2021 revenues is pegged at $12.93 billion, indicating a 7.41% increase from the year-ago quarter’s reported figure.
The consensus mark for earnings has moved up 0.2% to $5.69 over the past 30 days, suggesting growth of 45.9% from the figure reported in the year-ago quarter.
Charter beat on earnings in three of the trailing four quarters and missed the same in one, the average surprise being 11.03%.
Charter Communications, Inc. Price and EPS Surprise
Factors to Consider
Charter’s top line in the to-be-reported quarter is expected to have benefited from an increased number of Internet subscribers fueled by work-from-home and learn-from-home trends and a spike in media consumption, which is expected to have augured well for this cable giant.
Charter Communications’ Spectrum Networks announced that it recorded 8% month-over-month and year-over-year increases in household ratings in July in the 11 metered markets where it is available. It outpaced the major cable news and broadcast networks whose ratings dropped an average of 4% from the previous month and 20% year over year.
Spectrum News also cemented its place as the most-watched news network by Spectrum customers in July, averaging more than 2.8 million daily viewing households for an increase of 4% month over month across all linear and digital platforms in its nine-state footprint.
The Zacks Consensus Estimate for Residential-Internet revenues is pegged at $5.29 billion, indicating 12% growth from the figure reported in the year-ago quarter. The consensus mark for Residential-Internet subscribers is pegged at 28.06 million, implying 4.7% year-over-year subscriber growth.
On Jul 1, Charter Communications announced that Spectrum Networks became the most-watched broadcast and cable news network by Spectrum customers in June, averaging more than 2.7 million daily views across all linear and digital platforms across its footprint.
The company had 27.7 million residential Internet customers, up 5.4% year over year in second-quarter 2021. Internet revenues grew 15.2% year over year to $5.2 billion, driven by growth in Internet customers, promotional rate step-ups, rate adjustments and higher bundled revenue allocation. This trend is likely to have continued in the to-be reported quarter.
Charter’s expanding mobile subscriber base is also a key catalyst. The consensus mark for third-quarter mobile revenues stands at $580 million, indicating a surge of 57.6% from the figure reported in the year-ago quarter.
In the to-be-reported quarter, Charter Communications’ Spectrum Networks announced that it would offer the new iPhone 13 Pro, iPhone 13 Pro Max, iPhone 13, and iPhone 13 mini, the iPad (9th generation), and iPad mini, with a new all-screen design.
Charter’s multi-year distribution agreement with Comcast CMCSA-owned NBCUniversal for the latter’s full portfolio of broadcast, entertainment, Hispanic, news and sports content in Charter’s Spectrum homes and businesses across 41 states is expected to have aided video subscriber growth in the to-be-reported quarter.
The Zacks Consensus Estimate for Residential Video revenues is pegged at $4.39 billion, indicating growth of 4% from the figure reported in the year-ago quarter.
However, Charter has been suffering due to video-subscriber attrition, primarily due to cord-cutting and stiff competition from streamers like Netflix, Disney+ and Amazon prime video.
Small and medium-sized businesses have been worst hit by the pandemic. Charter’s substantial exposure (roughly 2 million customers) to this cohort is expected to have weighed on the company’s advertising revenue growth in the to-be-reported quarter.
The Zacks Consensus Estimate for advertising sales is pegged at $417 million, implying 9.3% decline from the figure reported in the year-ago quarter.
On Jul 1, Charter Communications’ advertising sales business, Spectrum Reach introduced a deterministic, cross-platform attribution solution with Blockgraph and TVSquared, providing its advertisers with aggregated and de-identified insights to effectively analyze addressable, streaming and linear TV campaigns. This is expected to have aided advertising revenues in the to-be-reported quarter.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Charter has an Earnings ESP of +0.66% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat in their upcoming releases:
Amphenol Corporation APH has an Earnings ESP of +1.02% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
CACI International CACI has an Earnings ESP of +4.43% and a Zacks Rank of 2 at present.
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