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Cable ONE (CABO) Lags Q2 Earnings, Tops Revenue Estimates

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Small-sized cable MSO (multi-service operator), Cable ONE Inc. (CABO - Free Report) reported mixed financial results in the second quarter of 2017. The bottom line missed the Zacks Consensus Estimate, while the top line beat the same.

Net Income

Quarterly net income was $28.58 million, highlighting an increase of 7.3% from the second quarter of 2016. Second-quarter 2017 earnings per share of $5.03 missed the Zacks Consensus Estimate of $5.10.

Revenue

Total revenue was $241.04 million, up 17.8% year over year and above the Zacks Consensus Estimate of $227.3 million. Of the total, Residential Data revenues were approximately $103.16 million, up 19.9%. Residential Video revenues totaled $84.87 million, up 14.7%. Residential Voice revenues were $11.42 million, up 4.3%. Business Services segment generated $32.54 million in revenues, up 32.9%. Advertising sales were $5.97 million, down 9.8%. Other revenues were $3.08 million, up 25.4%.

Cable One, Inc. Price, Consensus and EPS Surprise

 

Cable One, Inc. Price, Consensus and EPS Surprise | Cable One, Inc. Quote

Operating Metrics

In the reported quarter, operating expenses totaled $182.39 million, up 18.4% year over year. Operating income was $58.65 million, up 16.0% year over year. Adjusted EBITDA was $113.34 million, up 26.8% year over year. Adjusted EBITDA margin was 47.0% compared with 43.7% in the year-ago quarter. Net profit margin was 11.9% compared with 13.0% in the year-ago quarter.

Cash Flow

In the quarter under review, Cable ONE generated $52.59 million of cash from operations compared with $48.04 million in the prior-year quarter.

Liquidity

At the end of the second quarter of 2017, Cable ONE had $89.79 million of cash and cash equivalents compared with $138.04 million at the end of 2016. Total debt, at the end of second-quarter 2017, was $1,167.46 million compared with $530.89 million at the end of 2016. At the end of the reported quarter, the debt-to-capitalization ratio was 0.55 compared with 0.38 at the end of 2016.

Operating Statistics

As of Jun 30, the total customer base of Cable ONE was 655,309, down 0.7% year over year. Non-video customer base was 356,812, up 12.6% year over year. Non-video customers accounted for 54.4% of the total customer count compared with 48% at the end of the year-ago quarter.

Residential Segment: Total customers were 601,883, down 1.4% year over year. Data PSUs were 474,815, up 2.0%. Video PSUs were 284,695, down 12.4%. Voice PSUs count totaled 92,100, down 11.3%. Total PSUs were 851,610, down 4.8%.

Business Segment: Total customers were 53,426, up 7.6% year over year. Data PSUs were 46,909, up 9.8%. Video PSUs were 13,295, down 5.0%. Voice PSUs totaled 19,156, up 11.8%. Total PSUs were 79,360, up 7.5%.

Average Revenue Per User (ARPU): Residential data ARPU was $64.7, up 5.2%. Residential video ARPU was $81.65, up 9.5%. Residential voice ARPU was $34.98, up 1.2%. Business services ARPU was $175.69, up 5.4%.

Zacks Rank and Price Performance

Cable ONE is among the top 10 cable companies in the U.S., serving more than 800,000 residential and commercial customers in 21 states with high-speed internet, cable television and telephone service. However, we are concerned about the company’s operation in a saturated and competitive multi-channel U.S. video market, sharing space with leading cable MSOs like Comcast Corp. (CMCSA - Free Report) , Charter Communications Inc. (CHTR - Free Report) and AT&T Inc. (T - Free Report) in an intensely competitive cable TV market.

Cable ONE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past three months, shares of Cable ONE have increased 14.93% while the industry to which it belongs gained 3.11%.

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