CHTR
Charter Communications, Inc.
$110.11
Leveraged Infrastructure
80%
EV/EBITDA × Telecom Multiple
Strong
·
Conviction
Undervalued
Trading 81.8% below fair value
You pay
$110.11
Bear
$416.06
Fair
$604.91
Bull
$793.76
Bear
$416.06
+277.9%
EBITDA $21B × 7.2x − $97B debt
Fair
$604.91
+449.4%
EBITDA $21B × 8.4x − $97B debt
Bull
$793.76
+620.9%
EBITDA $21B × 9.6x − $97B debt
Adjust Assumptions
8.4x
Key Value Driver
EV/EBITDA multiple (8.4x) vs. 4.6× leverage
Implied Market Multiple
5.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (56 analysts)
$162.90
Divergence from AlphaVal
271%
Summary
At 8.4x EV/EBITDA on $21B EBITDA, enterprise value is $178B. After subtracting $97B net debt, equity value is $604.91 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 $162.90 (from 56 analysts). Our estimate is 271% 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