Cable One, Inc.

CABO Details

Cable One, Inc. (NYSE: CABO) is a telecommunications company operating in 24 Western, Midwestern, and Southern states. Its Sparklight and Clearwave brands provide integrated data, video, and voice services. It offered broadband services to roughly 1.144 million household and commercial clients out of over 2.7 million residences passed, and Gigabit (GB) data services to about 98% of its residences passed as of September 30, 2021. Its operating segments are 1) Residential Data, 2) Residential Video, and 3) Business Services.

Latest News:

• Quarterly Dividend: On November 19, 2021, CABO's Board announced the quarterly dividend of USD 2.75 per share payable on December 17, 2021, to shareholders of record on November 30, 2021.

Q3FY21 Results:

• Double-Digit Growth in Topline: The company reported YoY growth of 26.93% in total revenue to USD 430.24 million in Q3FY21 (ended September 30, 2021) compared to USD 338.96 million in Q3FY20, due to a 26.02% growth in the Residential Data segment.
• Decline in Net Income: Net income for Q3FY21 decreased 21.17% YoY and stood at USD 52.26 million compared to USD 66.29 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 489.54 million and total debt of USD 3.86 billion.

Key Risks:

• Geographical Concentration: The majority of CABO's customers are concentrated in the Mississippi Gulf Coast region and the larger Boise, Idaho area. As a result, any economic downturn in these areas could harm its operations.
• Dependence on Third-Party Suppliers: CABO is dependent on a limited number of third-party suppliers and licensors for hardware and software required to offer its services. Any contractual failure by these third parties could adversely impact its operations.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CABO Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CABO's share price has declined 20.31% in the past twelve months and is currently leaning towards the lower-band of the 52-week range of USD 1,674.35 to USD 2,326.80. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 38.59. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 2,081.71.

Considering the correction in the stock price in the past twelve months, strong profitability margins, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 1,708.585, up 0.51% as of December 14, 2021, 2:56 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.