Charter Communications (CHTR) Beats On Earnings In Q2

Charter Communications Inc (NASDAQ:CHTR). CHTR reported strong financial results in the second quarter of 2016, with both the bottom and the top line outpacing the respective Zacks Consensus Estimate.

Pro forma (after the recent acquisition of Time Warner Cable and Bright House) GAAP net income in the reported quarter was $280 million or 99 cents per share compared with a net income of $107 million or 39 cents per share in the year-ago quarter. Quarterly earnings per share of 99 cents were significantly above the Zacks Consensus Estimate of 22 cents per share.

Second-quarter 2016 total pro forma revenue of $9,988 million increased 6.6% year over year and surpassed the Zacks Consensus Estimate of $8,044 million.

Residential segment revenues came in at $8,005 million, up 5.6% from the prior-year quarter. Within the Residential segment, Video revenues totaled $4,143 million, up 1.7% year over year. Internet revenues came in at $3,132 million, up 12% from the prior-year quarter while Voice revenues were $730 million, down 3.3% year over year.

Commercial revenues totaled $1,345 million, up 13.4% year over year. Within the Commercial segment, Small and medium business revenues were $842 million, up 13.2% year over year while Enterprise revenues came in at $503 million, up 13.7% on a year-over-year basis.

Advertising revenues were $405 million, up 3.9% year over year. Other revenues came in at $233 million, up 7.5%.

Quarterly operating costs were $6,446 million compared with $6,120 million in the year-ago quarter. Second-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $3,542 million compared with $3,250 million in the year-earlier quarter. EBITDA margin came in at 35.5% compared with 34.7% in the second quarter of 2015.

In the reported quarter, Charter Communications generated $1,590 million of cash from operations compared with $531 million a year ago. Free cash flow in the reported quarter was $524 million versus $158 million a year ago.

At the end of second-quarter 2016, Charter Communications had $555 million cash and cash equivalents and $62,203 million of outstanding debt compared with $5 million and $35,723 million, respectively, at the end of 2015.

CHARTER COMM-A Price, Consensus and EPS Surprise

CHARTER COMM-A Price, Consensus and EPS Surprise | CHARTER COMM-A Quote

Subscriber Statistics

Residential segment: As of Jun 30, 2016, Charter Communications had 16.934 million video, 20.667 million high-speed Internet and 10.255 million voice customers. During the reported quarter, the company gained 236,000 high-speed Internet and 83,000 voice customers but lost 152,000 video customers.

Average revenue per customer relationship was $109.99 compared with $108.86 in the prior-year quarter. Single Play penetration was 38.1%, Double Play penetration was 27% and Triple Play penetration was 35%.

Commercial Segment: As of Jun 30, 2016, Charter Communications had 378,000 video, 1,148,000 high-speed Internet and 725,000 voice subscribers. During the reported quarter, the company added 9,000 video customers, 41,000 high-speed Internet and 32,000 voice customers.

Zacks Rank & Other Stocks to Consider

Charter Communications currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Liberty Broadband Corp. LBRDA, Liberty LiLAC Group LILA and Cincinnati Bell Inc. CBB. All three stocks currently carry a Zacks Rank #2 (Buy).