taobanker
App Builder
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 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'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
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 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
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 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
Paramount Skydance's leverage looks greater than its total enterprise value, leaving the equity impaired. Some assets are great, but the weaker linear ones are melting faster. Cost cuts will save the metrics but kill the future. It is unlikely to dig out; even if it can, it will take years to tell. Its bonds look more interesting than the equity if the optimistic case holds. x.com x.comÂ
Group 1 Automotive keeps piling onto an already overwhelming debt load. That outweighs the bull case from @AKWilk, who cites a 40% year-to-date drop, a mid-teens free cash flow yield, a 35% share-count reduction and a possible UK divestiture pushed by an activist. x.comÂ
Charter Communications is covered in a new, free-to-read note. x.comÂ
Topicus should borrow to buy back its stock, because it can borrow for less than its free-cash-flow yield at this price. Deployments are very weak this year, even though Topicus has the widest moat, the safest balance sheet and the lowest leverage. Management is wrong not to use debt for buybacks here, and the issue has been raised directly with the companies. x.com x.comÂ
