- Charter Communications (CHTR) has managed to keep up with Apple’s year-to-date performance.
- Furious buybacks since 2016 have helped keep the stock bullish.
- Strong upside potential and a parabolic structure are also driving CHTR’s surprising growth.
Charter Communications, Inc. (NASDAQ:CHTR) is giving Apple (NASDAQ:AAPL) a run for its money. The telecommunications company is up by around 65% year-to-date, on par with Apple’s 2019 growth. Charter’s ascent is impressive considering that Apple has managed to outperform its FAANG peers.
Thus, CHTR’s monumental ascent prompted us to look into the stock and uncover the drivers of growth. Here are three reasons why Charter has managed to keep up with the iPhone maker in terms of stock performance.
1. Charter Communications’ Relentless Company Buybacks
One of the primary reasons why CHTR has been on a tear is because the company has been fiercely retiring its shares through buybacks. In the third-quarter, the telecoms firm spent $2.767 billion on stock buybacks.
That’s just the tip of the iceberg. The company has been retiring shares since September 2016.
Chris Winfrey, Charter’s chief financial officer, said in a conference call,
Since September of 2016, we’ve repurchased 21% of Charter’s equity at an average price of $330 per share.
As of September 2019, that number has climbed to an impressive 23%.
So far, the company has given no indication that it plans to halt its aggressive buybacks anytime soon. This is positive news for long-term investors. A management team that spends billions in retiring shares should help give CHTR a long-term rosy outlook. It also gives the equity an advantage over AAPL’s performance.
2. Strong Growth Potential
Charter’s management is buying back shares because they see the company’s upside potential. This comes at a time when the telecom company is finding strength in broadband growth to alleviate losses in the video subscription arena. In the third-quarter, Charter lost 75,000 residential video customers. The company more than made up for the losses by adding 380,000 internet subscribers in the same quarter.
In addition, Charter also posted stellar Q3 numbers. Its diluted earnings per share for the quarter stood at $1.74, which was higher than consensus estimates of $1.66. In addition, its Q3 revenue of $11.45 billion topped Wall Street expectations of $11.41 billion. The company also reported a net income of $387 million in the same quarter.
These numbers put Charter in a strong growth trajectory. A Seeking Alpha report revealed that analysts see a staggering growth of 46% in annual earnings per share over the next five years.
These numbers paint a picture of a fundamentally robust company. It is not surprising that its share price continues to shoot up.
3. Parabolic Market Structure
Another reason why CHTR is neck and neck with Apple is because of its parabolic market structure. A look at the stock’s monthly chart reveals that it has been rising steeply in a parabola since 2010.
Apple’s monthly chart is quite similar to CHTR’s chart. The only difference is the timeline. The tech giant has been in a strong bullish rally since 2009.
Therefore, it is not surprising to see that CHTR is keeping up with Apple in terms of stock performance. The aggressive buyback program, strong upside potential, and long-term parabolic rally have all driven CHTR to greater heights.
Disclaimer: The above should not be considered trading advice from CCN. The writer does not own Charter Communications (CHTR) or Apple (AAPL) stock.
This article was edited by Sam Bourgi.
Last modified: November 8, 2019 15:42 UTC