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Charter Communications (CHTR) Q1 Loss Wider than Expected

Charter Communications Inc. CHTR reported disappointing financial results in the first quarter of 2016, with both the bottom and the top line lagging the respective Zacks Consensus Estimate. Nevertheless, the company witnessed strong subscriber gain for triple-play video, high-speed Internet and voice.

GAAP net loss in the reported quarter came in at $188 million or $1.68 per share compared with a net loss of $81 million or a loss of 73 cents per share in the year-ago quarter. Quarterly loss per share of $1.68 was significantly wider than the Zacks Consensus Estimate of a loss of 84 cents.

First-quarter 2016 total revenue of $2,530 million increased 7.1% year over year, but marginally missed the Zacks Consensus Estimate of $2,533 million.

Residential segment revenues came in at $2,109 million, up 6.5% from the prior-year quarter. Within the Residential segment, Video revenues totaled $1,170 million, up 3.7% year over year. Internet revenues came in at $804 million, up 12.1% from the prior-year quarter while Voice revenues were $135 million, up 0.5% year over year.

Commercial revenues totaled $301 million, up 12% year over year. Within the Commercial segment, Small and medium business revenues were $202 million, up 11.3% year over year while Enterprise revenues came in at $99 million, up 13.4% on a year-over-year basis.  

Advertising revenues were $72 million, up 8.8% year over year. Other revenues came in at $48 million, up 2.7%.

Quarterly operating costs were $1,647 million compared with $1,562 million in the year-ago quarter. First-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $883 million compared with $800 million in the year-earlier quarter. EBITDA margin came in at 34.9% compared with 33.9% in the first quarter of 2015.

In the reported quarter, Charter Communications generated $424 million of cash from operations compared with $528 million a year ago. Free cash flow in the reported quarter was a negative $61 million against a positive $101 million a year ago.

At the end of first-quarter 2016, Charter Communications had $1,278 million cash and cash equivalents and $37,124 million of outstanding debt compared with $5 million and $35,723 million, respectively, at the end of 2015.

Subscriber Statistics

Residential segment: As of Mar 31, 2016, Charter Communications had 4.332 million video, 5.368 million high-speed Internet and 2.633 million voice customers. During the reported quarter, the company gained 10,000 video, 141,000 high-speed Internet and 35,000 voice customers.

Average revenue per customer relationship was $111.04 compared with $109.53 in the prior-year quarter. Single Play penetration was 39.3%, Double Play penetration stood at 28.4% and Triple Play penetration was 32.3%.

Commercial Segment: As of Mar 31, 2016, Charter Communications had 113,000 video, 359,000 high-speed Internet and 231,000 voice subscribers. During the reported quarter, the company added 5,000 video customers, 14,000 high-speed Internet and 13,000 voice customers.

Zacks Rank & Other Stocks to Consider

Charter Communications currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in this sector include Cable ONE Inc. CABO, Iridium Communications Inc. IRDM and DISH Network Corp. DISH. All three stocks currently carry a Zacks Rank #2 (Buy).

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DISH NETWORK CP (DISH): Free Stock Analysis Report
 
IRIDIUM COMMUN (IRDM): Free Stock Analysis Report
 
CHARTER COMM-A (CHTR): Free Stock Analysis Report
 
CABLE ONE INC (CABO): Free Stock Analysis Report
 
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