Investment Thesis
Charter Communications exhibits severe financial stress with a critical liquidity position (0.40x current ratio) and extreme leverage (5.76x D/E) that outweighs operational strengths. Despite substantial operating cash flow and reasonable margins, declining net income (-13.5% YoY) alongside the unexplained 6061% revenue spike signals deteriorating earnings quality and integration risks that threaten financial stability.
Strengths
- Strong operating cash flow of 4.3B provides debt servicing capacity
- Reasonable operating margin of 23.6% indicates operational efficiency
- Adequate interest coverage ratio of 11.1x demonstrates current debt service capability
Risks
- Critical liquidity crisis with current ratio of 0.40x—cannot cover short-term obligations with current assets
- Extreme leverage at 5.76x debt-to-equity with only 517M cash against 94.4B debt—minimal financial flexibility
- Deteriorating profitability with net income down 13.5% YoY despite massive revenue growth suggests acquisition integration issues or margin compression
- Very poor returns on capital (ROE 7.1%, ROA 0.8%) indicate inefficient capital deployment
- Unexplained 6061% YoY revenue growth suggests significant acquisition/consolidation with uncertain synergy realization
Key Metrics to Watch
- Current ratio trend—any further decline below 0.40 signals imminent refinancing or restructuring risk
- Free cash flow sustainability—verify if 1.4B FCF is sustainable to service debt
- Debt-to-EBITDA ratio—critical to assess deleveraging trajectory post-acquisition
- Operating margin stability—monitor if 23.6% margin holds through integration
Financial Metrics
Revenue
13.6B
Net Income
1.2B
EPS (Diluted)
$9.17
Free Cash Flow
1.4B
Total Assets
154.6B
Cash
517.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
23.6%
Net Margin
8.6%
ROE
7.1%
ROA
0.8%
FCF Margin
10.7%
Balance Sheet & Liquidity
Current Ratio
0.40x
Quick Ratio
0.40x
Debt/Equity
5.76x
Debt/Assets
0.0%
Interest Coverage
11.10x
Long-term Debt
94.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T15:32:49.441446 |
Data as of: 2026-03-31 |
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