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Charter (CHTR) to Report Q2 Earnings: What's in the Cards?

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Charter Communications (CHTR - Free Report) is set to report second-quarter 2021 results on Jul 30.

The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $12.61 billion, indicating a 7.77% increase from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings has moved up 0.2% to $4.81 over the past 30 days, suggesting growth of 32.5% from the figure reported in the year-ago quarter.

Notably, Charter beat on earnings in three of the trailing four quarters and missed the same in one, the average surprise being 19.4%.

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 coronavirus-induced work-from-home wave and spike in media consumption, which is expected to have augured well for this cable giant.

On May 19, Charter Communications announced that Spectrum Networks continued to grow its news audience in April, averaging more than 3 million daily viewing households, higher than other broadcast and cable news network viewed by Spectrum customers across Spectrum Networks’ nine-state footprint.

The Zacks Consensus Estimate for Residential-Internet revenues is pegged at $5.12 billion, indicating 13.1% growth from the figure reported in the year-ago quarter. The consensus mark for Residential-Internet subscribers is pegged at 27.614 million, implying 4.9% year-over-year subscriber growth.

The company had 27.3 million residential Internet customers, up 7.4% year over year in the first quarter 2021. Internet revenues grew 15.4% year over year to $5.1 billion.

Charter’s expanding mobile subscriber base is also a key catalyst. The consensus mark for second-quarter mobile revenues stands at $521 million, indicating a surge of 68.1% from the figure reported in the year-ago quarter.

In the to-be-reported quarter, Spectrum Mobile started offering Apple’s new iPad Pro and the advanced iPhone 12 and iPhone mini in an all-new purple finish. The company started taking orders for the new iPad Pro, featuring the breakthrough M1 chip and 5G, in May.

However, Charter has been suffering from video-subscriber attrition, primarily due to cord-cutting and stiff competition from streamers like Netflix, Disney+ and Amazon prime video.

The Zacks Consensus Estimate for Residential Video revenues is pegged at $4.33 billion, indicating decline of 0.8% from the figure reported in the year-ago quarter.

Charter’s multi-year distribution agreement with Comcast (CMCSA - Free Report) owned NBCUniversal for NBCUniversal’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.

Notably, small and medium-sized businesses have been worst hit by coronavirus. Charter’s substantial exposure (roughly 2 million customers) to this cohort is expected to have weighed on the company’s top-line growth, partially offset by recovering advertising demand in the to-be- reported quarter.

The Zacks Consensus Estimate for advertising sales is pegged at $370 million, implying 48.6% growth from the figure reported in the year-ago 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. But that’s not the case here.

Charter has an Earnings ESP of -8.14% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Carrier Global Corporation (CARR - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Etsy, Inc. (ETSY - Free Report) has an Earnings ESP of +24.26% and a Zacks Rank #3.