Is Charter Communications stock a buy or sell amid slowing subscriber growth?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 30, 2021
  • Charter Communications stock fell by 4.44% on Friday after reporting its FQ3 results.
  • The company announced its most recent quarterly results before markets opened, beating expectations.
  • However, subscriber growth slowed, putting pressure on the stock price.

On Friday, Charter Communications Inc. (NASDAQ:CHTR) shares plummeted 4.44% after announcing its most recent quarterly results. The company reported its fiscal Q3 revenue and earnings before markets opened, beating the consensus for analyst expectations. However, Charter’s subscription growth slowed, putting pressure on the stock price.

Charter Communications posted FQ3 GAAP earnings per share of $6.50, beating the average for analyst estimates of $5.75. On the other hand, revenue for the quarter increased by 9.1% from the same quarter a year ago to $13.14 billion, $190 million ahead of estimates. 

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However, total customer relationships (residential and small/medium businesses) increased by 185,000 to $31.9 million, for a net increment of 1 million during the last 12 months.

Analysts were able to point out the decelerating growth rate during the quarter, reflected across several segments of the business.

Charter’s growth still looks exciting

From an investment perspective, although the decelerating subscriber growth is a cause for concern, Charter Communications still offers exciting growth prospects based on its earnings projections. 

Analysts expect its EPS to rise by 106.60% this year, before increasing at an average annual rate of 36.20% over the next five years.

Therefore, given the company’s reasonable forward P/E ratio of 22.73, it could be time to bet on long-term growth.

In addition, Charter stock has plunged more than 17% since the 1st of September, pushing its YTD gain lower to 4.31%.

Source – TradingView

Technically, Charter Communication shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock has plummeted closer to the oversold conditions of the 14-day RSI.

Therefore, investors could target potential rebounds at about $707.90, or higher at $743.68. On the other hand, $646.23 and $611.69 are crucial support levels.

Is the rebound on the money?

In summary, although Charter Communications stock continues to trade under intense pressure amid slowing subscriber growth, its bottom line looks promising.

In addition, the stock offers an exciting outlook at compelling valuation multiples. Therefore, the recent pullback could be an opportunity to buy.

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