CHTR
Charter Communications, Inc.
$145.15
Leveraged Infrastructure
80%
EV/EBITDA × Telecom Multiple
Strong
·
Conviction
Undervalued
Trading 72.2% below fair value
You pay
$145.15
Bear
$358.78
Fair
$521.63
Bull
$684.49
Bear
$358.78
+147.2%
EBITDA $21B × 7.2x − $97B debt
Fair
$521.63
+259.4%
EBITDA $21B × 8.4x − $97B debt
Bull
$684.49
+371.6%
EBITDA $21B × 9.6x − $97B debt
Key Value Driver
EV/EBITDA multiple (8.4x) vs. 4.6× leverage
Implied Market Multiple
5.4x
Summary
Our base-case estimate uses EV/EBITDA × Telecom Multiple. We then blend that result with the average analyst price target of $259.25 from 55 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $521.63 per share.
Warnings
Debt is 4.6x annual operating profit. Because the company carries so much debt, even small shifts in business value cause big swings in the stock price.
Only 21% of operating profit turns into actual cash for shareholders. Big investments and interest payments consume most of what the business earns.
We value this business based on total operating profit relative to total enterprise value (debt + equity). Profit-per-share metrics are unreliable when debt makes up most of the company's value.
Wall Street's average price target is $259.25 (from 55 analysts). Our estimate is 156% above the consensus -- consider that gap carefully.
Key Risks
- Debt refinancing at higher rates compresses equity value quickly
- EBITDA flatters — capex, interest, and taxes eat the cash flow
- Cord-cutting and wireless substitution are structural headwinds for cable