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Charter Communications (CHTR) Q4 Earnings: What's in Store?
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Charter Communications (CHTR - Free Report) is scheduled to release fourth-quarter 2017 results on Feb 2, before the market opens.
In three of the previous four quarters, the company’s bottom line lagged the Zacks Consensus Estimate, with an average miss of 53.32%.
Let’s see how things are shaping up prior to this announcement.
Factors Likely to Influence in Q4
Charter Communications’ plans to launch wireless services in 2018 are encouraging. The initiative is aimed at retaining customers in this competitive world.Notably, it has inked an agreement with U.S. telecom behemoth, Verizon Communications (VZ - Free Report) to operate as a mobile virtual network operator (MVNO). The company will utilize Verizon Communication’s wireless network along with its WiFi network to offer mobile services.
Further, the company has plans to execute field trials for the upcoming 5G wireless network. Notably, these trials were backed by spectrum test licenses granted by the FCC.
The twin buyout of Time Warner Cable and Bright House Networks has strengthened the company’s foothold in hybrid fiber coax (HFC) and fiber networks. The company is resorting to various initiatives to improve Spectrum products and cloud-based user interfaces.
Charter Communications has witnessed growth in residential and commercial internet as well as voice customer addition, evident from increase in revenues and subscriber gain. Further, investments in business services division and rollout of several initiatives will drive upcoming results.
Backed by such prospects and latest ventures, the company portrays an impressive price performance. Over the past three months, the stock has returned 16.4% compared with the industry’s rally of 13.3%.
Despite such positives, Charter Communications continues to lose subscribers to online video streaming service providers such as Netflix (NFLX - Free Report) , Hulu.com, YouTube etc. because of their cheap source of TV programming. In third-quarter 2017, the company lost 1,04,000 video customers in the residential segment. If the subscriber count continues to fall, Charter Communications’ video businesses are likely to be at risk. The company’s operation in a saturated and competitive multi-channel U.S. video market is a major concern.
Further, gaining customers from competitors is a difficult task as most pay-TV operators are offering innovative packages. Moreover, the U.S. pay-TV industry is affected by the ongoing massive consolidation between telecom and cable-TV operators.
Charter Communications’ high debt level is a potential hazard. At the end of the third quarter, the company had $2,164 million of cash and cash equivalents and $68,132 million of outstanding debt compared with $1,535 million and $62,464 million, respectively, in the year-ago quarter. The debt-to-capitalization ratio at the end of the reported quarter was 0.61 compared with 0.54 at the end of 2016.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for Charter Communications this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Charter Communications has an Earnings ESP of -2.59%. This is because the Most Accurate estimate is at 83 cents while the Zacks Consensus Estimate is pegged at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with the Earnings ESP Filter.
Zacks Rank: Charter Communications has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Charter Communications, Inc. Price and EPS Surprise
Additionally, the company portrays a positive earnings surprise history surpassing the Zacks Consensus Estimate in three of the previous four quarters with an average beat of 120.16%.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Charter Communications (CHTR) Q4 Earnings: What's in Store?
Charter Communications (CHTR - Free Report) is scheduled to release fourth-quarter 2017 results on Feb 2, before the market opens.
In three of the previous four quarters, the company’s bottom line lagged the Zacks Consensus Estimate, with an average miss of 53.32%.
Let’s see how things are shaping up prior to this announcement.
Factors Likely to Influence in Q4
Charter Communications’ plans to launch wireless services in 2018 are encouraging. The initiative is aimed at retaining customers in this competitive world.Notably, it has inked an agreement with U.S. telecom behemoth, Verizon Communications (VZ - Free Report) to operate as a mobile virtual network operator (MVNO). The company will utilize Verizon Communication’s wireless network along with its WiFi network to offer mobile services.
Further, the company has plans to execute field trials for the upcoming 5G wireless network. Notably, these trials were backed by spectrum test licenses granted by the FCC.
The twin buyout of Time Warner Cable and Bright House Networks has strengthened the company’s foothold in hybrid fiber coax (HFC) and fiber networks. The company is resorting to various initiatives to improve Spectrum products and cloud-based user interfaces.
Charter Communications has witnessed growth in residential and commercial internet as well as voice customer addition, evident from increase in revenues and subscriber gain. Further, investments in business services division and rollout of several initiatives will drive upcoming results.
Backed by such prospects and latest ventures, the company portrays an impressive price performance. Over the past three months, the stock has returned 16.4% compared with the industry’s rally of 13.3%.
Despite such positives, Charter Communications continues to lose subscribers to online video streaming service providers such as Netflix (NFLX - Free Report) , Hulu.com, YouTube etc. because of their cheap source of TV programming. In third-quarter 2017, the company lost 1,04,000 video customers in the residential segment. If the subscriber count continues to fall, Charter Communications’ video businesses are likely to be at risk. The company’s operation in a saturated and competitive multi-channel U.S. video market is a major concern.
Further, gaining customers from competitors is a difficult task as most pay-TV operators are offering innovative packages. Moreover, the U.S. pay-TV industry is affected by the ongoing massive consolidation between telecom and cable-TV operators.
Charter Communications’ high debt level is a potential hazard. At the end of the third quarter, the company had $2,164 million of cash and cash equivalents and $68,132 million of outstanding debt compared with $1,535 million and $62,464 million, respectively, in the year-ago quarter. The debt-to-capitalization ratio at the end of the reported quarter was 0.61 compared with 0.54 at the end of 2016.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for Charter Communications this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Charter Communications has an Earnings ESP of -2.59%. This is because the Most Accurate estimate is at 83 cents while the Zacks Consensus Estimate is pegged at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with the Earnings ESP Filter.
Zacks Rank: Charter Communications has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Charter Communications, Inc. Price and EPS Surprise
Charter Communications, Inc. Price and EPS Surprise | Charter Communications, Inc. Quote
Key Pick
AMC Entertainment Holdings (AMC - Free Report) from the broader Consumer and Discretionary sector has the right combination of elements to post an earnings beat in fourth-quarter 2017. It is expected to release the quarter's results on Feb 27. The stock has an Earnings ESP of +6.39% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, the company portrays a positive earnings surprise history surpassing the Zacks Consensus Estimate in three of the previous four quarters with an average beat of 120.16%.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>