Cable One, Inc.

CABO Details

Cable One, Inc. (NYSE: CABO) is a fully integrated supplier of data, video, and voice services to residential and business clients in 24 Western, Midwestern, and Southern states. It primarily serves non-metropolitan, secondary, and tertiary markets, with roughly 71% of its customers residing in seven states as of September 30, 2021: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina, and Texas.

Latest News:

• Joint Venture Outcomes: CABO stated on January 03, 2022, that it had formed a joint venture with GTCR LLC (GTCR), Stephens Capital Partners LLC (Stephens), The Pritzker Organization, LLC (TPO), and certain members of the management team to assist the accelerated growth of Clearwave Fiber LLC (Clearwave Fiber). It is a recently formed business that owns Clearwave Communications, a subsidiary of CABO, and certain fiber assets owned by Hargray Communications, another subsidiary of CABO.
• Dividend Declaration: On November 19, 2021, CABO declared a quarterly dividend of USD 2.75 per common share, paid on December 17, 2021, to shareholders of record on November 30, 2021.

Q3FY21 Results:

• Sequential Increase in Revenue: The company has recorded continual increment in total revenue and posted USD 430.24 million in Q3FY21 (ended September 30, 2021), an increase of 26.93% from USD 338.96 million in Q3FY20.
• Decline in bottomline: 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: Most CABO's customers live in the Mississippi Gulf Coast region and the greater Boise, Idaho area. As a result, any economic downturn in these areas could harm company activities.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

CABO Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CABO's share price has fallen 17.86% in the past six months and is currently leaning around the 52-week low of USD 1,524.57. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 28.01, indicating an oversold zone. We have valued the stock using the EV/EBITDA multiple based relative valuation methodology and arrived at a target price of USD 1,918.32.

Considering the significant correction in the stock price, strong revenue track record, new partnerships, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 1548.78, down 2.12%, as of January 20, 2022.

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

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

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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