Value Investigator
Quality-Growth Investor, Fundamental Research & Portfolio Strategy
Charter is a very asymmetric bet at 2.35x consensus 2027 EPS, letting it buy back shares massively at a P/E of about 2. A modeled bad case with much bigger, continued subscriber losses still yields about $30 of owner earnings. Charter can offset lost subscribers by raising prices, capturing M&A synergies and paying down debt, with many years of deleveraging before EBITDA would fall 20% and debt covenants would bite. x.com x.com x.comÂ
Charter Communications can compound earnings through buybacks even if broadband slowly declines, because customers rarely switch. Alternatives are at best about 10% better for some power users, not 10x, and people won't even leave a bank that costs 300% more. It trades around 1x operating cash flow; capex can't be cut much near term, and interest and taxes weigh, but with buybacks an earnings path toward 2035 looks possible. x.com x.comÂ
Charter Communications is covered in a new, free-to-read note. x.comÂ
Charter Communications is now worth owning at prices last seen in 2013, with a margin of safety coming simply from lower capex. That marks a turn from the earlier view that buybacks at excessive prices made the stock unattractive. Comcast is likewise too cheap to pass up, helped by its upcoming split, and Charter's repurchases can resume within days. x.com x.comÂ
Charter's stock-based compensation of a little over half a billion dollars a year is a real cost to shareholders that should come out of free cash flow, since it dilutes their ownership. One mitigating point on the debt: John Malone was right to borrow very long term, with over 90% at fixed rates and some bonds running into the 2060s, per a post the author replies to. x.com x.com x.com x.comÂ
Comcast and Charter now have a clear catalyst path to higher free cash flow per share from what were already the cheapest valuations in the S&P 500. Comcast's NBCUniversal spinoff, Brian Roberts stepping down and former CFO Michael Angelakis returning as CEO look like a precursor to merging Comcast with Charter, possibly next year once Charter's Cox deal closes. Netflix may buy NBCU at a healthy multiple. Both are very crowded shorts, echoing Warner Bros. Discovery in summer 2025. x.com x.com … Show more
Charter is drowning in debt, and that leverage outweighs its cash-flow appeal. @k3ithmccullough puts Charter at a 25% free-cash-flow yield by 2028. The most bullish point is that capex is expected to come down, but on a quick look the heavy debt load makes the stock look very poor. x.comÂ
Charter looks like a value buy at a forward P/E of 3.8, but the risk of further big drops makes it a pass. The stock fell 24% on its earnings reaction, back to its 2016 price. x.comÂ
Charter Communications operates in a structurally declining market and spends capex just to keep EBITDA flat at best. Fintwit's interest in the stock was misguided, and it is not a comparable case to the one @PineTreeFlag raised. x.comÂ
Charter Communications looks like a trade going forward rather than a long-term investment. It behaves like an amplified version of long-dated Treasury bonds, so if interest rates fall over the coming years the shares would benefit, but many long-duration assets offer that without the leverage risk if rates stay here or higher. x.comÂ
