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Charter (CHTR) to Report Q1 Earnings: What's in the Cards?

Charter Communications CHTR is set to report first-quarter 2021 results on Apr 30.

The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $12.49 billion, indicating a 6.4% increase from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings has moved up 0.7% to $4.29 over the past 30 days, suggesting growth of 118.8% from the figure reported in the year-ago quarter.

Notably, Charter beat on earnings in three of the trailing four quarters and missed the same in one, the average negative surprise being 13.81%.

Factors to Consider

Charter’s top line in the to-be-reported quarter is expected to have benefited from an increased number of Internet subscribers amid coronavirus-induced social distancing norms. Increased media consumption and work-from-home wave are expected to have augured well for this cable giant.

Notably, the company had 29.079 million residential Internet customers, up 6.6% year over year in the fourth quarter of 2020. Internet revenues grew 11.9% year over year to $4.86 billion.

The Zacks Consensus Estimate for Residential-Internet revenues is pegged at $4.93 billion, indicating 12% growth from the figure reported in the year-ago quarter. The consensus mark for Residential-Internet subscribers is pegged at 27.364 million, implying 7.4% year-over-year subscriber growth.

In the to-be-reported quarter, Charter launched its multiyear, multibillion-dollar broadband buildout initiative to deliver gigabit high-speed broadband access to more than 1 million unserved customer locations. Charter expects to invest approximately $5 billion to support its buildout initiative.

Moreover, Charter’s expanding mobile subscriber base is also a key catalyst. The consensus mark for first-quarter mobile revenues stands at $447 million, indicating a surge of 73.3% from the figure reported in the year-ago quarter.

However, Charter persistently suffers video-subscriber attrition, primarily due to cord-cutting and stiff competition from streamers like Netflix, Disney+ and Amazon prime video.

On Jan 7, 2021 Charter Communications announced a multi-year distribution agreement with Comcast CMCSA owned NBCUniversal for NBCUniversal’s full portfolio of broadcast, entertainment, Hispanic, news and sports content in Charter’s Spectrum homes and businesses across 41 states. This is expected to have aided video subscriber growth in the to-be reported quarter.

Meanwhile, rising job losses due to coronavirus are expected to have intensified cord-cutting while subscription dues are expected to have shot up.

The Zacks Consensus Estimate for Residential Video revenues is pegged at $4.45 billion, indicating growth of 0.7% from the figure reported in the year-ago quarter.

Notably, small and medium-sized businesses are worst hit by coronavirus. Charter’s substantial exposure (roughly 2 million customers) to this cohort is expected to have negatively impacted its top-line growth in the to-be-reported quarter.

Weakness in SMB is also expected to have hurt Charter’s advertising business. The Zacks Consensus Estimate for advertising sales is pegged at $357 million, implying 2.2% decline from the figure reported in the year-ago quarter.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Charter has an Earnings ESP of +1.94% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are a few more companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat in their upcoming releases:

Atlassian Corporation PLC TEAM has an Earnings ESP of +24.48% and is Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

CDW Corporation CDW has an Earnings ESP of +0.51% and a Zacks Rank #2.

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