CHTR Charter Communications
Stable cable cash flows, heavily levered equity: small changes in broadband trends swing value dramatically.
The story
Charter is the second-largest US cable operator. Its moat is a sunk-cost hybrid fiber-coax network covering about 57M passings, with dense local scale. The business is mature to declining. Broadband subscribers are shrinking under pressure from fixed wireless and fiber overbuilders, and video keeps eroding, while mobile bundling and the Cox combination support pricing and cost synergies. The equity is a thin, heavily levered slice (about $96B net debt) on top of a stable but ex-growth cash-flow stream.
Revenue has been flat for four years and broadband losses are accelerating, so I use slight near-term decline and zero terminal growth. The margin settles near 22%, a bit below the recent 23% peak, because competition forces promotional pricing and network upgrades. Beta sits above the 0.8 industry anchor because the debt-to-equity ratio is about 6.7x, and a 5% failure probability reflects refinancing risk on a $97B debt stack.
Value drivers
| Revenue growth (Y1) | -1.0% |
| Terminal growth | 0.0% |
| Forecast horizon | 5y |
| Target operating margin | 22.0% |
| Years to target margin | 3 |
| Sales-to-capital | 0.50 |
| Beta | 1.15 |
| Failure probability | 5.0% |
| Cost of capital (WACC) | 9.0% |
| Terminal WACC | 8.9% |
Valuation bridge
| PV of explicit FCFF | 35.76B |
| PV of terminal value | 66.26B |
| Equity value | 1.15B |
| ÷ shares → per share | $10.01 |
News
bullish +0.25 · 8 articles
- 62% Undervalued? Charter Communications (CHTR) As Edge AI Expansion Meets A Share Slide
- T Paid Holders $58 Billion While The Stock Trailed The Market
- Is Charter (CHTR) Turning Its Edge AI Push Into a New Margin Story for Broadband?
- Charter Communications Sees Higher Broadband Losses, Better Financial Trends, UBS Says
- Comcast’s Dividend Keeps Growing While the Market Treats It Like a Melting Ice Cube
- Comcast Stock Hits Its Lowest Level in More Than a Decade. Why the Trouble Runs Deep.
- The Cheapest Stocks in the S&P 500: Are They a Bargain or a Trap?
- Are You Overpaying For Verizon Stock Versus Its Rivals?
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 53.85B | -1.0% | 22.8% | 9.48B | 0 | 9.48B | 8.70B |
| 2 | 53.45B | -0.8% | 22.4% | 9.25B | 0 | 9.25B | 7.79B |
| 3 | 53.18B | -0.5% | 22.0% | 9.05B | 0 | 9.05B | 6.99B |
| 4 | 53.05B | -0.3% | 22.0% | 9.02B | 0 | 9.02B | 6.40B |
| 5 | 53.05B | 0.0% | 22.0% | 9.02B | 0 | 9.02B | 5.88B |
Key risks
- Fixed wireless and fiber overbuild accelerating broadband subscriber losses
- Leverage of about 4x EBITDA and refinancing at higher rates squeezing a thin equity cushion
- Capex for network evolution and rural buildout staying elevated longer than planned, depressing free cash flow
Catalysts
- Realization of Cox merger synergies and deleveraging
- Mobile line growth and convergence bundles stabilizing broadband churn
⚠ Extreme gap to market price — large, heavily-covered stocks are rarely mispriced this much; the gap likely embeds disruption, decline, or balance-sheet risk the model underweights. Treat as a flag to investigate, not a verdict.