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Cable One (CABO - Free Report) provides data, video, and voice services in the United States. The company offers residential data services including Wi-Fi signal enhancements, digital video services with access to hundreds of channels, and a cloud-based DVR feature. Sparklight TV, its IPTV video service that enables customers to stream video from the cloud, is supported through devices such as Amazon Firestick, Apple TV, and Android-based smart televisions.
The Phoenix, Arizona-based company also provides its services to business customers including small to mid-markets, enterprises, and wholesale and carrier customers. Cable One serves over one million residential and business customers combined.
The Zacks Rundown
CABO, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Cable Television industry group, which ranks in the bottom 15% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months. Note how this group has widely underperformed the market so far in 2024:
Image Source: Zacks Investment Research
Candidates in the bottom tiers of industries can often be solid short candidates. While individual stocks have the ability to outperform even when included in a weak industry group, the industry association serves as a headwind for any potential rallies and the journey forward is that much more difficult.
CABO has hit a series of 52-week lows this year and failed to produce any meaningful rally, all while the general market reaches new heights. When a stock fails to rally while the general market is bullish, it’s telling us that buying pressure remains weak and the stock should be avoided at all costs.
Recent Earnings Misses & Deteriorating Outlook
CABO has fallen short of earnings estimates in each of the past four quarters. Back in February, the company reported fourth-quarter earnings of $10.66/share, missing the $12.86/share consensus EPS estimate by -17.11%.
Cable One has posted a trailing four-quarter average earnings miss of -22.81%. Consistently falling short of earnings estimates is a recipe for underperformance, and Cable One is no exception.
The Zacks Rank #5 (Strong Sell) stock has been on the receiving end of negative earnings estimate revisions as of late. For the current year, analysts have decreased estimates by -15.44% in the past 60 days. The 2024 Zacks Consensus EPS Estimate is now $43.36/share, reflecting negative growth of -3.94% relative to last year.
Image Source: Zacks Investment Research
Declining earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
Technical Outlook
As illustrated below, CABO is in a sustained downtrend. Notice how the stock is trading below both the 50-day (blue line) and 200-day (red line) moving averages. The stock is making a series of lower lows, with no respite from the selling in sight. Also note how both moving averages are sloping down – another good sign for the bears.
Image Source: StockCharts
CABO stock has also experienced what is known as a ‘death cross’, wherein the stock’s 50-day moving average crosses below its 200-day moving average. CABO would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. Shares remain in negative territory this year while the general market is showing strength.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock is not set to produce new highs anytime soon. The fact that CABO is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns.
A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend. Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of CABO until the situation shows major signs of improvement.
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Bear of the Day: Cable One (CABO)
Cable One (CABO - Free Report) provides data, video, and voice services in the United States. The company offers residential data services including Wi-Fi signal enhancements, digital video services with access to hundreds of channels, and a cloud-based DVR feature. Sparklight TV, its IPTV video service that enables customers to stream video from the cloud, is supported through devices such as Amazon Firestick, Apple TV, and Android-based smart televisions.
The Phoenix, Arizona-based company also provides its services to business customers including small to mid-markets, enterprises, and wholesale and carrier customers. Cable One serves over one million residential and business customers combined.
The Zacks Rundown
CABO, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Cable Television industry group, which ranks in the bottom 15% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months. Note how this group has widely underperformed the market so far in 2024:
Image Source: Zacks Investment Research
Candidates in the bottom tiers of industries can often be solid short candidates. While individual stocks have the ability to outperform even when included in a weak industry group, the industry association serves as a headwind for any potential rallies and the journey forward is that much more difficult.
CABO has hit a series of 52-week lows this year and failed to produce any meaningful rally, all while the general market reaches new heights. When a stock fails to rally while the general market is bullish, it’s telling us that buying pressure remains weak and the stock should be avoided at all costs.
Recent Earnings Misses & Deteriorating Outlook
CABO has fallen short of earnings estimates in each of the past four quarters. Back in February, the company reported fourth-quarter earnings of $10.66/share, missing the $12.86/share consensus EPS estimate by -17.11%.
Cable One has posted a trailing four-quarter average earnings miss of -22.81%. Consistently falling short of earnings estimates is a recipe for underperformance, and Cable One is no exception.
The Zacks Rank #5 (Strong Sell) stock has been on the receiving end of negative earnings estimate revisions as of late. For the current year, analysts have decreased estimates by -15.44% in the past 60 days. The 2024 Zacks Consensus EPS Estimate is now $43.36/share, reflecting negative growth of -3.94% relative to last year.
Image Source: Zacks Investment Research
Declining earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
Technical Outlook
As illustrated below, CABO is in a sustained downtrend. Notice how the stock is trading below both the 50-day (blue line) and 200-day (red line) moving averages. The stock is making a series of lower lows, with no respite from the selling in sight. Also note how both moving averages are sloping down – another good sign for the bears.
Image Source: StockCharts
CABO stock has also experienced what is known as a ‘death cross’, wherein the stock’s 50-day moving average crosses below its 200-day moving average. CABO would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. Shares remain in negative territory this year while the general market is showing strength.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock is not set to produce new highs anytime soon. The fact that CABO is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns.
A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend. Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of CABO until the situation shows major signs of improvement.