Why Charter Communications Stock Popped 16% in January

MarketsMotley Fool

What happened

Shares of Charter Communications (NASDAQ: CHTR) jumped 16.2% last month, according to data from S&P Global Market Intelligence, following the company's strong fourth-quarter financial results.

Continue Reading Below

So what

Charter's Q4 revenue rose 5.9% year over year to $11.23 billion, beating Wall Street's expectations of $11.14 billion. The company delivered broad-based growth, with revenue in its residential, commercial, and advertising segments rising 3.9%, 4.5%, and 34.1%, respectively.

In addition, Charter completed a major network upgrade initiative that will help to bring advanced digital features, such as interactive programming, to customers it acquired as part of its acquisitions of Time Warner Cable and Bright House Networks.

"We performed well in 2018, growing our internet customer base by 1.3 million, cable revenue by 4.7%, and cable adjusted EBITDA by 6.5% -- very strong operating and financial performance, particularly in the midst of what we believe is the largest cable integration ever," Chairman and CEO Tom Rutledge said in a press release.

Now what

With the integration of Time Warner and Bright House now largely complete, Charter is beginning to scale back its capital expenditures. This should provide a huge boost to the company's free cash flow and, by extension, its ability to return more capital to shareholders through stock buybacks.

Perhaps in anticipation of these greater capital returns, investors have bid Charter Communication's stock price up another 4% so far in February, suggesting that even more gains may lie ahead for the cable titan.

10 stocks we like better than Charter CommunicationsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Charter Communications wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of January 31, 2019

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.