It’s just too much money to ignore in a quiet week of insider buys.
Charter Communications, Inc. (CHTR) Director Eric Louis Zinterhofer purchased 27,202 shares at $374.04 for a total investment north of $10 million. (1) It’s the director’s first CHTR trade. As such, we don’t have a history to make a judgement on his ability to be on the right side of the trade.
But, his action is at the very least a statement trade and a measure of his commitment/confidence, in our opinion. Unless you just won the $1.9 billion Powerball, $10 million is a lot of money no matter how much you have. You don’t get to make investments of that magnitude by making foolish decisions.
Charter Communications is a leading broadband connectivity company and cable operator serving more than 32 million customers in 41 states through its Spectrum brand. Over an advanced communications network, the company offers a full range of state-of-the-art residential and business services including Spectrum Internet, TV, Mobile and Voice.
For small and medium-sized companies, CHTR offers Spectrum Business which delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Additionally, its Spectrum Reach delivers tailored advertising and production for the modern media landscape.
Wall Street believes the communication services company could gain more than 40% in the 12 months with a consensus one-year price target of $499.69. (2) Chater trades at $348.82 as we type. Shares were recently as low as $297.66 on October 13th (of course) with a 52-week high of $706.93.
Much like the overall market, Charter stock rebounded from its 52-week low after tumbling from $480ish in mid-August. Shares got to the better side of the 50-day moving average temporarily, but then retreated below the benchmark number following the Federal Reserve’s rate hike. According to our technical take, Charter shares should catch support at $340 and then again at $320 before challenging its 52-week low. To the upside, if the stock can bust through $380, the next level of resistance would be around $400, in our view.
Longer term, the street forecasts earnings per share (EPS) of $36.73 and revenue of $55.17 billion in 2023. That’s projected earnings growth of 14.5 percent compared to this year’s EPS projection of $32.09 per share while sales are only expected to climb 2 percent from $54.07 billion. (3)
Right now, CHTR trades at 10.99 times earnings (P/E) and at 1.11 times sales (P/S). Meanwhile, the average company in the industry trades with a P/E of 12.1 and P/S ratio of 1.6. If Charter traded at the industry’s average earnings and sales valuations, the stock would hit $444.43 and $567.05, respectively.
OVERALL: Charter Communications, Inc. (CHTR) appears to have attractive longer-term upside if the communications company hits Wall Street’s 2023 expectations and trades with industry norm valuations.
With a beta of 1.10, CHTR shares are slightly more volatile than the S&P 500 (beta of 1). Charter Communications is only appropriate for investors with an average risk tolerance and at least an 18-month time horizon.
1 – https://www.secform4.com/insider-trading/1267621.htm
2 – https://finance.yahoo.com/quote/CHTR?p=CHTR
3 – https://finance.yahoo.com/quote/CHTR/analysis?p=CHTR