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What's in Store for Cable ONE (CABO) this Earnings Season?

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Cable ONE Inc. (CABO - Free Report) is slated to report third-quarter 2016 financial numbers on Nov 2, after market close.

Last quarter, the company posted a positive earnings surprise of 1.99%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 12.16%. Let’s see how things are shaping up for this announcement.

Factors at Play

Cable ONE is a cable TV company that could be an interesting play for investors because, not only does the stock have decent short-term momentum, but is seeing solid activity on the earnings estimate front as well. The company is among the top 10 cable companies in the U.S., offering high-speed Internet, cable television and telephone services to almost 700,000 customers across 19 states. Cable ONE provides consumers with a wide range of products and services, including wireless Internet, high-definition programming and free, unlimited long-distance calling in continental U.S.

Cable ONE also made major changes in its channels and their availability to customers. New lineups were made to bundle similar programs, making it easier to access news, sports and other channels for viewers. We are also impressed with the company’s efforts to reward shareholders with a quarterly cash dividend. In Sep 2016, the board of directors at Cable ONE declared a quarterly cash dividend of $1.50 per share. The dividend was scheduled to be paid on Sep 2, 2016, to stockholders of record at the close of business as on Aug 16, 2016.

Meanwhile, the company faces intense competition from leading cable multi-service-operators (MSO) in the U.S. like Comcast Corp. (CMCSA - Free Report) and Charter Communications Inc. (CHTR - Free Report) .

Earnings Whispers

Our proven model does not conclusively show that Cable ONE is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Cable ONE has an earnings ESP of -3.85%. This is because the Most Accurate estimate is pegged at $4.75 while the Zacks Consensus Estimate is higher at $4.94.

Zacks Rank: Cable ONE has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

CABLE ONE INC Price and EPS Surprise

 

CABLE ONE INC Price and EPS Surprise | CABLE ONE INC Quote

Stock to Consider

Here is a company that has the right combination of elements to post an earnings beat this quarter.

Open Text Corporation (OTEX - Free Report) , with an earnings ESP of +6.12% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. The company’s earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters.

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