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HomeValue stockBest Long-Term Value Stock. CHTR - 300

Best Long-Term Value Stock. CHTR – 300

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Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.

Growth Stock Analysis As of 24 February 2024

NYSE: CHTR (Charter Communications)

  • Charter Communications, Inc. operates as a broadband connectivity and cable operator company serving residential and commercial customers in the United States.
  • Fiber overbuilders are reevaluating their deployment goals and aiming to increase penetration rates while adjusting prices upward. Charter’s network upgrades will bolster its competitive standing.
  • Despite shares trading at a 5-year low, Charter has consistently generated higher cash flow compared to five years ago. While free cash flow (FCF) may face pressure, capital expenditures (CapEx) are expected to normalize gradually over time.
  • Charter also offers VoIP for voice communication and broadband solutions, including internet access, data networking, fiber connectivity, video entertainment, and business telephone services for businesses and carriers.
  • Additionally, the company provides communication products, managed service solutions, and data connectivity services to mobile and wireline carriers on a wholesale basis. It also owns and operates regional sports networks and news channels.
  • Charter serves around 32 million customers across 41 states. Founded in 1993, Charter Communications, Inc. is headquartered in Stamford, Connecticut.

Charter Facts: By the Numbers:

  • Top Shareholdings of FMC Corporation (FMC):
HolderSharesDate Reported% OutValue
Dodge & Cox Inc8,399,842Dec 30, 20235.78%2,517,600,654
Vanguard Group Inc8,251,716Dec 30, 20235.68%2,473,204,329
Capital International Investors6,873,200Dec 30, 20234.73%2,060,035,512
Blackrock Inc.6,716,836Dec 30, 20234.63%2,013,170,094
State Street Corporation5,805,506Dec 30, 20234.00%1,740,026,265
Harris Associates L.P.5,172,968Dec 30, 20233.56%1,550,441,975
Berkshire Hathaway, Inc3,828,941Dec 30, 20232.64%1,147,610,201
Massachusetts Financial Services Co.2,518,167Dec 30, 20231.73%754,745,016
JP Morgan Chase & Company2,330,069Dec 30, 20231.60%698,368,283
Geode Capital Management, LLC2,021,196Dec 30, 20231.39%605,792,867

What we think are PROs of Charter Communications:

  • The company has undergone significant evolution through mergers and acquisitions, rebounding notably after a bankruptcy filing in 2009.
  • Charter is actively expanding its broadband and mobile services, emphasizing bundling and cross-selling strategies to stimulate adoption.
  • Broadband subscriber growth is surpassing competitors, and the company is increasing the monthly price of its Spectrum internet service by $5.
  • Users can link their phones to the Spectrum mobile network through Wi-Fi spots shared by Charter and Comcast.
  • Fiber overbuilders are revising their deployment targets to increase penetration rates and raise prices. Charter’s network upgrades will bolster its competitive position.

What we think the RISKs are in Charter Communications:

  • Fiber-to-the-home (FTTH) perceived as a threat due to its high installation costs, but cable has historically outperformed fiber.
  • Weak housing market poses a risk to acquiring new subscribers, though Charter (CHTR) is managing the downturn effectively.
  • Concerns regarding fixed wireless broadband (FWB) increasing industry competition, but FWB adoption is limited by demand and supply constraints.
  • Highly geared with $98 billion of debt, with over 90% maturing beyond 2025 and an average weighted maturity window of 13 years.
  • Management targets a total leverage range of 4-4.5x EBITDA, with interest accounting for 22.3% of adjusted EBITDA in the second quarter.

FUNDAMENTALS:

Market Cap. = 48.6B

Beta = 1.03

P/E Ratio = 10.01

52 week Range = 279.64 – 458.30

Revenue = 54.61B

EPS = 30.54

  • Technicals:
    – CHTR stock price is trading at 5 years low and preparing for good bounce.
    – On the Monthly chart Price is far away from its EMA. SO it will try to bounce higher and go towards its EMA levels.
    – Volumes are also increasing which indicates the accumulation phase at this level.
    – We can expect a good bounce for next 5-6 months in this stock towards 500 and above levels.
    – RSI (Weekly) is at the lowest zone or at oversold zone around 30, it may bounce soon towards 50 to 70 levels.
    – As per Fibonacci levels, our first target will be around 480 & then 600+

Entry: 300

Target: 480 & 640

Stoploss: 240

Our Final Thought: Charter Communications holds a dominant regional monopoly, offering high-speed bandwidth at competitive prices. Despite initial concerns, fixed wireless broadband has proven inferior in speed and bandwidth, finding success only in select rural areas. Fiber-to-the-home, while attempted by many, remains costly and time-consuming to implement. Charter’s strong recurring revenue base and decreasing capital intensity position it well for future growth, with free cash flow earmarked for debt reduction and buybacks. Despite recent stock fluctuations, Charter’s multiples are below its historical averages, presenting an attractive investment opportunity. Its EV/EBITDA ratio of 7.3x suggests undervaluation, with potential for substantial upside if it reaches its typical trading range of 9-10x. Considering its steady-state free cash flow and attractive valuation, Charter is recommended as a promising investment option. Technically it is available at five years low price with strong fundamentals support.

Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and  your own due diligence before investing.

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