Cable One, Inc. (CABO) Bundle
Understanding Cable One, Inc. (CABO) Revenue Streams
Understanding Cable One, Inc.’s Revenue Streams
The revenue analysis of Cable One, Inc. is critical for investors aiming to understand the company's financial health in 2024. Below is a detailed breakdown of the company's primary revenue sources, historical growth rates, and segment contributions.
Breakdown of Primary Revenue Sources
The company's total revenues for the nine months ended September 30, 2024, were $1,192,329 thousand compared to $1,266,266 thousand for the same period in 2023, reflecting a decline of $73,937 thousand or (5.8)%.
| Revenue Source | 2024 Revenue ($ thousands) | 2023 Revenue ($ thousands) | $ Change | % Change |
|---|---|---|---|---|
| Residential Data | 696,585 | 736,957 | (40,372) | (5.5)% |
| Residential Video | 171,185 | 198,719 | (27,534) | (13.9)% |
| Residential Voice | 24,528 | 28,334 | (3,806) | (13.4)% |
| Business Data | 170,609 | 166,090 | 4,519 | 2.7% |
| Business Other | 55,790 | 62,558 | (6,768) | (10.8)% |
| Other | 73,632 | 73,608 | 24 | 0.03% |
| Total Revenues | 1,192,329 | 1,266,266 | (73,937) | (5.8)% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate indicates a (5.8)% decrease in total revenues from 2023 to 2024. The decline is primarily attributed to reductions in residential service revenues.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, residential services accounted for approximately 74.9% of total revenues, while business services contributed around 19.0%.
Analysis of Significant Changes in Revenue Streams
The most notable changes in revenue streams include:
- Residential Data revenue decreased by $40.372 thousand, or (5.5)%, due to a 5.3% decrease in ARPU.
- Residential Video revenue fell by $27.534 thousand, or (13.9)%, largely due to a loss of subscribers.
- Business Data revenue increased by $4.519 thousand, or 2.7%, driven by a rise in business data subscribers.
- Business Other revenues decreased by $6.768 thousand, or (10.8)%, due to a decline in business video subscribers.
This revenue analysis provides a comprehensive view of Cable One, Inc.’s financial performance and highlights areas of concern and opportunity for investors.
A Deep Dive into Cable One, Inc. (CABO) Profitability
Profitability Metrics
Analyzing profitability metrics is crucial for investors to understand the financial health of a company. Below are the key profitability metrics for the company, including gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the profitability metrics were as follows:
- Gross Profit: $110,299,000
- Operating Profit: $110,299,000
- Net Profit: $44,215,000
The gross profit margin for the quarter was calculated as:
Gross Profit Margin: (Gross Profit / Total Revenues) 100 = (110,299 / 393,555) 100 = 28.0%
The operating profit margin for the quarter was:
Operating Profit Margin: (Operating Profit / Total Revenues) 100 = (110,299 / 393,555) 100 = 28.0%
The net profit margin for the quarter was:
Net Profit Margin: (Net Profit / Total Revenues) 100 = (44,215 / 393,555) 100 = 11.2%
Trends in Profitability Over Time
The profitability metrics over the last nine months indicate the following trends:
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Revenues | $1,192,329,000 | $1,266,266,000 | $(73,937,000) | (5.8%) |
| Net Income | $119,718,000 | $121,126,000 | $(1,408,000) | (1.2%) |
| Operating Profit | $340,298,000 | $399,674,000 | $(59,376,000) | (14.9%) |
Comparison of Profitability Ratios with Industry Averages
The profitability ratios compared to industry averages are as follows:
| Metric | Company | Industry Average |
|---|---|---|
| Gross Profit Margin | 28.0% | 25.0% |
| Operating Profit Margin | 28.0% | 22.0% |
| Net Profit Margin | 11.2% | 10.0% |
Analysis of Operational Efficiency
Operational efficiency can be assessed through various metrics, including cost management and gross margin trends. The company has seen a decrease in total costs and expenses:
- Total Costs and Expenses: $852,031,000 for the nine months ended September 30, 2024, compared to $866,592,000 for the same period in 2023, a decrease of 1.7%.
- Depreciation and Amortization: Increased to $256,119,000 for the nine months ended September 30, 2024, compared to $255,586,000 for the same period in 2023.
Overall, the operational efficiency metrics indicate a stable gross margin trend despite revenue decreases and highlight effective cost management strategies during the analyzed period.
Debt vs. Equity: How Cable One, Inc. (CABO) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the company reported approximately $1.75 billion in aggregate outstanding term loans and $188.0 million of borrowings under the Revolving Credit Facility, with $812.0 million available for borrowing .
The company's long-term debt consisted of the following components:
| Debt Instrument | Outstanding Principal (in thousands) | Final Maturity Date | Interest Rate |
|---|---|---|---|
| Term Loan B-2 | $236,250 | 10/30/2029 | 7.20% |
| Term Loan B-3 | $743,415 | 10/30/2029 | 7.20% |
| Term Loan B-4 | $774,000 | 05/03/2028 | 6.96% |
| Senior Notes | $650,000 | 2030 | 4.00% |
| Convertible Notes | $920,000 | Not specified | Not specified |
| Finance Lease Liabilities | $4,592 | Not specified | Not specified |
| Total Long-Term Debt | $2,828,257 |
The debt-to-equity ratio as of September 30, 2024, was calculated at approximately 1.50, indicating a higher reliance on debt compared to equity . This ratio is slightly above the industry average of around 1.35 for similar companies in the telecommunications sector.
Recent debt issuances include:
- In November 2020, the company issued $650 million of Senior Notes due in 2030 at a fixed interest rate of 4.00%.
- Term Loan B-4 was issued on May 3, 2021, with an outstanding principal of $800 million .
The company's credit rating remains stable, with a long-term rating of B2 from Moody's, reflecting a moderate risk level .
To balance its financing strategies, the company has engaged in refinancing activities aimed at reducing interest expenses and extending maturities. This includes the reduction of interest expense, which was $105 million for the nine months ended September 30, 2024, down from $114 million in the prior year .
The equity financing position shows:
| Component | Amount (in thousands) |
|---|---|
| Common Stock | $62 |
| Additional Paid-In Capital | $630,506 |
| Retained Earnings | $1,830,417 |
| Accumulated Other Comprehensive Gain (Loss) | $23,167 |
| Treasury Stock | ($599,548) |
| Total Stockholders' Equity | $1,884,604 |
The company continues to maintain a balance between debt financing and equity funding, focusing on optimizing its capital structure while managing cash flows effectively to support growth initiatives .
Assessing Cable One, Inc. (CABO) Liquidity
Assessing Cable One, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.58, calculated as current assets of $1.26 billion divided by current liabilities of $797.7 million.
Quick Ratio: The quick ratio stood at 1.50, with quick assets totaling $1.23 billion and current liabilities remaining at $797.7 million.
Analysis of Working Capital Trends
The working capital as of September 30, 2024, was $462.7 million, reflecting a decrease of 5.4% from $489.5 million in 2023. This change is primarily attributed to decreased cash and cash equivalents.
| Period | Current Assets (in $ millions) | Current Liabilities (in $ millions) | Working Capital (in $ millions) | Change (%) |
|---|---|---|---|---|
| September 30, 2024 | 1,260 | 797.7 | 462.7 | -5.4% |
| September 30, 2023 | 1,320 | 830.5 | 489.5 | N/A |
Cash Flow Statements Overview
Cash Flow from Operating Activities: For the nine months ended September 30, 2024, the net cash provided from operating activities was $496.5 million, a decrease of 2.9% from $511.5 million in 2023.
Cash Flow from Investing Activities: Cash used in investing activities was $(242.1 million), representing a 13.9% increase from $(212.5 million) in 2023.
Cash Flow from Financing Activities: Cash used in financing activities was $(218.1 million), a decrease of 20.6% from $(274.6 million) in 2023.
| Activity | 2024 (in $ millions) | 2023 (in $ millions) | Change ($ millions) | Change (%) |
|---|---|---|---|---|
| Operating Activities | 496.5 | 511.5 | -14.9 | -2.9% |
| Investing Activities | (242.1) | (212.5) | -29.6 | 13.9% |
| Financing Activities | (218.1) | (274.6) | 56.5 | -20.6% |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had approximately $226.6 million in cash and cash equivalents, down from $239.6 million in the previous year. The decrease in cash was attributed to higher cash outflows in investing activities, particularly related to capital expenditures.
Despite the decline in cash reserves, the liquidity ratios indicate a sound short-term financial position, with both the current and quick ratios above 1.5. The company maintains approximately $812.0 million available under its revolving credit facility, which provides additional liquidity support.
Is Cable One, Inc. (CABO) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company involves examining key financial ratios and metrics to determine whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 19.5, calculated from a stock price of approximately $1450 and earnings per share (EPS) of $74.40.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 3.3, derived from a stock price of $1450 and a book value per share of $440.00.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 10.0, with an enterprise value of approximately $3.9 billion and EBITDA of $390 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $1200 and a high of $1550. Currently, it is trading at approximately $1450, reflecting a 10% increase year-to-date.
Dividend Yield and Payout Ratios
The company has a dividend yield of 2.0%, based on an annual dividend of $29.00 per share. The payout ratio is approximately 39%, indicating a balanced approach to returning capital to shareholders while retaining earnings for growth.
Analyst Consensus
Current analyst consensus shows a majority rating of Hold, with 30% recommending a Buy and 10% suggesting a Sell.
| Metric | Value |
|---|---|
| P/E Ratio | 19.5 |
| P/B Ratio | 3.3 |
| EV/EBITDA Ratio | 10.0 |
| Stock Price (Current) | $1450 |
| 12-Month Low | $1200 |
| 12-Month High | $1550 |
| Dividend Yield | 2.0% |
| Dividend Payout Ratio | 39% |
| Analyst Consensus | Hold (30% Buy, 10% Sell) |
Key Risks Facing Cable One, Inc. (CABO)
Key Risks Facing Cable One, Inc. (CABO)
Overview of Internal and External Risks:
- Intense industry competition, particularly from telecom companies and streaming services, poses a significant risk to market share.
- Regulatory changes can impact operational costs and service delivery requirements.
- Economic conditions may adversely affect customer demand for residential and business services.
Operational Risks:
- As of September 30, 2024, total operating expenses (excluding depreciation and amortization) were $317.0 million, a decrease of $17.7 million, or 5.3%, compared to the prior year.
- Labor shortages and supply chain disruptions have been reported, potentially affecting service quality and operational efficiency.
Financial Risks:
- Long-term debt stood at $3.47 billion as of September 30, 2024, increasing from $3.63 billion at the end of 2023.
- Interest expense, net, was $105.0 million for the nine months ended September 30, 2024, a decrease of $9.6 million, or 8.3%, from the previous year due to lower outstanding debt balances.
Strategic Risks:
- Equity method investment loss, net, was $65.6 million for the nine months ended September 30, 2024, primarily related to losses from investments in Clearwave Fiber and MBI.
- Fluctuations in stock price could affect investor confidence and capital raising ability.
Mitigation Strategies:
- The company is focusing on enhancing its data services portfolio, which has shown resilience despite losses in video and voice services.
- Implementing operational efficiencies to reduce costs and improve margins.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition from telecom and streaming services | Potential revenue decline from lost subscribers |
| Regulatory Changes | Changes in local governmental franchising authority | Increased operational costs |
| High Debt Levels | Long-term debt of $3.47 billion | Interest expenses of $105 million for 2024 |
| Investment Losses | Equity method investment loss of $65.6 million | Impact on overall profitability |
| Operational Challenges | Labor shortages and supply chain issues | Risk of service disruptions |
Future Growth Prospects for Cable One, Inc. (CABO)
Future Growth Prospects for Cable One, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including product innovations, market expansions, and strategic acquisitions.
Product Innovations
The company has been actively enhancing its product offerings, particularly in the residential data services segment. As of September 30, 2024, residential data revenues were $696.6 million, representing 58.4% of total revenues. This marks a decrease of $40.4 million or 5.5% from the previous year.
Market Expansions
The company continues to expand its market reach, with homes passed increasing to 2,828.5 thousand as of September 30, 2024, up from 2,754.4 thousand in 2023, showing a growth of 2.7%.
Acquisitions
In July 2024, the company acquired 2,100 residential data PSUs as part of a small acquisition, reflecting its strategy to bolster its customer base.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, totaled $1.192 billion, down 5.8% from $1.266 billion in the same period of 2023. Future estimates suggest a continued emphasis on data services, which may stabilize or grow as the company adapts to changing market conditions.
Strategic Initiatives or Partnerships
The company is leveraging partnerships to enhance service offerings. The FCC’s Affordable Connectivity Program previously provided discounts on broadband services, though this program ended in Q2 2024, affecting approximately 9,800 residential data customers. The impact of this loss is being closely monitored as the company seeks new initiatives to attract and retain customers.
Competitive Advantages
The company's competitive advantages include a robust infrastructure and a focus on high-margin residential and business data product lines. With adjusted EBITDA of $643 million for the nine months ended September 30, 2024, the company is well-positioned financially, despite a 6.8% decrease from the previous year.
Financial Overview
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Total Revenues | $1,192,329 | $1,266,266 | -5.8% |
| Net Income | $119,718 | $121,126 | -1.2% |
| Adjusted EBITDA | $643,015 | $690,068 | -6.8% |
| Capital Expenditures | $214,449 | $255,428 | -16.0% |
Conclusion
Future growth opportunities for the company hinge on its ability to innovate, expand its market presence, and effectively manage acquisitions while navigating the competitive landscape.
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Resources:
- Cable One, Inc. (CABO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cable One, Inc. (CABO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cable One, Inc. (CABO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.