Charter Communications (CHTR): Assessing Valuation After Lawsuits Over Affordable Connectivity Program Disclosures

If you’re holding or eyeing Charter Communications (CHTR), recent headlines might have you leaning in for a closer look. Multiple law firms have launched securities class action suits alleging Charter failed to fully disclose how the end of the Affordable Connectivity Program would hurt its internet subscriber growth and revenue. The lawsuits are capturing attention, pressing investors to rethink the trustworthiness of Charter’s past communications and the risks in the months ahead.

Against this backdrop, Charter’s stock has not performed well over the past year. Momentum has clearly faded, with the shares down 17% and recently experiencing some sharper drops. Major events like the Cox Communications acquisition and ongoing broadband network investments have kept the company in the news, but legal pressures and sluggish customer trends seem to weigh more heavily on the market’s view for now.

So, after a year of disappointment and headline risk, is Charter undervalued at these levels, or is the market signaling more pain to come? Let’s dig into what the numbers say.

Most Popular Narrative: 31.9% Undervalued

According to the most widely followed narrative, Charter Communications appears deeply undervalued, with its fair value estimated well above current market prices.

"Charter Communications is rapidly increasing its Spectrum Mobile line growth, providing a strong contribution to EBITDA and expected revenue growth due to its market-leading mobile connectivity. Charter is leveraging its fully converged network and expanding CBRS deployment to handle increasing broadband and handset data usage efficiently, which should reduce costs and improve margins."

What is propelling analysts to see so much hidden value in Charter today? The narrative leans into aggressive assumptions about revenue and profit expansion, banking on game-changing customer upgrades and bold operational bets. Want to discover which forecasts, some of which would put Charter in exclusive company, are behind this high conviction call? The most surprising levers driving the $391.9 target might just change your outlook on where Charter could head next.

Result: Fair Value of $391.9 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising competition from fiber providers and challenges following the wind-down of the Affordable Connectivity Program could quickly challenge the bullish view on Charter’s rebound.

Find out about the key risks to this Charter Communications narrative.

Another View: What Does Our DCF Model Say?

To add perspective, the Simply Wall St DCF model also suggests Charter may be trading below its estimated value. This comes to a similar conclusion as the analyst consensus. But how much weight should we give this approach? Does the market see a story those models might miss?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Charter Communications for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Charter Communications Narrative

If you see things differently, or want to test your own assumptions, you can shape and share your Charter outlook in just a few minutes. Do it your way.

A great starting point for your Charter Communications research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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