CHTR Dropped 37% In A Month. Have You Fully Evaluated The Risk?
Charter Communications (CHTR) stock is down 36.5% in 21 trading days. History of recovery post-dips is not on your side and there is fundamental risk – specific to balance sheet and downturn resilience. Consider the following data:
- A $37 Bil company with $55 Bil in revenue currently trading at $261.75.
- Last 12 month revenue growth of 0.9% and operating margin of 24.5%.
- Has Debt to Equity ratio of 2.6 and Cash to Assets ratio of 0.0
- Currently trading at P/E multiple of 7.1 and P/EBIT multiple of 2.9
- Has returned (median) 16.6% within a year following sharp dips since 2010. See CHTR Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for CHTR, see Buy or Sell CHTR Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and CHTR drops another 20-30% to $183.22 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Charter Communications (CHTR) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns.
CHTR provides broadband connectivity, cable, subscription video services, high-definition TV, DVR, pay-per-view, Internet access, data networking, and fiber connectivity in the United States.
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2022 Inflation Shock
- CHTR stock fell 63.1% from a high of $821.01 on 2 September 2021 to $303.35 on 30 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $455.73 on 18 September 2023 , and currently trades at $261.75
| CHTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -63.1% | -25.4% |
| # of Days for Full Recovery | Not Fully Recovered | 464 |
2020 Covid Pandemic
- CHTR stock fell 31.5% from a high of $542.46 on 19 February 2020 to $371.70 on 20 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 29 May 2020
| CHTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -31.5% | -33.9% |
| # of Days for Full Recovery | 70 | 148 |
2018 Correction
- CHTR stock fell 35.1% from a high of $402.50 on 6 September 2017 to $261.04 on 31 May 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 July 2019
| CHTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -35.1% | -19.8% |
| # of Days for Full Recovery | 405 | 120 |
Worried that CHTR could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.