Overview of Cable One (CABO) 3rd quarter 2021 earnings report
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Category: Cable One (CABO)
Date: 8 November 2021 Stock price of Cable One (CABO): $1767.10 Market Capital of Cable One (CABO): $10.7 billion We take a look at the 3rd quarter 2021 earnings report of Cable One (CABO) a leading broadband communications provider. For the quarter the group reported $430.2 million and net income of $52.3 million.
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On October 8, 2021, the Company entered into an agreement to purchase certain assets and assume certain liabilities from CableAmerica, a data, video and voice services provider in central Missouri, for $113.0 million in cash on a debt-free basis, subject to customary post-closing adjustments. "
More About Cable One (CABO)
Cable One, Inc. (NYSE:CABO) is a leading broadband communications provider committed to connecting customers and communities to what matters most. Through Sparklight® and the associated Cable One family of brands, the Company serves more than 1.1 million residential and business customers in 24 states. Over its fiber-optic infrastructure, the Cable One family of brands provide residential customers with a wide array of connectivity and entertainment services, including Gigabit speeds, advanced WiFi and video. For businesses ranging from small and mid-market up to enterprise, wholesale and carrier, the Company offers scalable, cost-effective solutions that enable businesses of all sizes to grow, compete and succeed.
Overview of Cable One (CABO) 3rd quarter 2021 earnings report
● Total revenues were $430.2 million in the third quarter of 2021 compared to $339.0 million in the third quarter of 2020, an increase of 26.9%. Revenues for the third quarter of 2021 included $78.4 million from Hargray operations and revenues for the third quarter of 2020 included $9.4 million from the Anniston System. Year-over-year, residential data revenues increased 26.0% and business services revenues increased 44.2%. Residential data and business services revenues for the third quarter of 2021 included $27.8 million and $22.8 million, respectively, from Hargray operations. Residential data and business services revenues for the third quarter of 2020 included $4.3 million and $1.4 million, respectively, from the Anniston System.
● Net income was $52.3 million in the third quarter of 2021 (including $6.0 million from Hargray operations), a decrease of 21.2% year-over-year. Adjusted EBITDA(1) was $220.5 million in the third quarter of 2021 (including $34.7 million from Hargray operations), an increase of 26.4% year-over-year. Net profit margin was 12.1% and Adjusted EBITDA margin(1) was 51.2%.
● Net cash provided by operating activities was $182.7 million in the third quarter of 2021, an increase of 44.1% year-over-year. Adjusted EBITDA less capital expenditures(1) was $99.6 million in the third quarter of 2021 (including $12.2 million from Hargray operations), a decrease of $0.2 million, or 0.2%, compared to the third quarter of 2020.
● Residential data primary service units (“PSUs”) grew by approximately 13,000, or 1.4%, sequentially and grew by approximately 151,000, or 19.2%, year-over-year. Approximately 110,000 residential data PSUs were acquired in the Hargray Acquisition, of which approximately 19,000 were contributed to Hargray in the Anniston Exchange.
● Net income was $52.3 million in the third quarter of 2021 (including $6.0 million from Hargray operations), a decrease of 21.2% year-over-year. Adjusted EBITDA(1) was $220.5 million in the third quarter of 2021 (including $34.7 million from Hargray operations), an increase of 26.4% year-over-year. Net profit margin was 12.1% and Adjusted EBITDA margin(1) was 51.2%.
● Net cash provided by operating activities was $182.7 million in the third quarter of 2021, an increase of 44.1% year-over-year. Adjusted EBITDA less capital expenditures(1) was $99.6 million in the third quarter of 2021 (including $12.2 million from Hargray operations), a decrease of $0.2 million, or 0.2%, compared to the third quarter of 2020.
● Residential data primary service units (“PSUs”) grew by approximately 13,000, or 1.4%, sequentially and grew by approximately 151,000, or 19.2%, year-over-year. Approximately 110,000 residential data PSUs were acquired in the Hargray Acquisition, of which approximately 19,000 were contributed to Hargray in the Anniston Exchange.
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Cable One's management commentary on their 3rd quarter 2021 earnings
PHOENIX--(BUSINESS WIRE)-- Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable One”) today reported financial and operating results for the quarter ended September 30, 2021.
On October 8, 2021, the Company entered into an agreement to purchase certain assets and assume certain liabilities from CableAmerica, a data, video and voice services provider in central Missouri, for $113.0 million in cash on a debt-free basis, subject to customary post-closing adjustments. The CableAmerica acquisition is expected to provide the Company opportunities for footprint expansion in Missouri, margin growth and potential cost synergy realization. The transaction is subject to customary closing conditions and is expected to be financed with cash on hand and close before the end of 2021.
Liquidity and Capital Resources
At September 30, 2021, the Company had $489.5 million of cash and cash equivalents on hand compared to $574.9 million at December 31, 2020. The Company’s debt balance was $3.9 billion and $2.2 billion at September 30, 2021 and December 31, 2020, respectively. The Company had $458.6 million available for borrowing under its revolving credit facility as of September 30, 2021.
The Company paid $16.6 million in dividends to stockholders during the third quarter of 2021.
On October 8, 2021, the Company entered into an agreement to purchase certain assets and assume certain liabilities from CableAmerica, a data, video and voice services provider in central Missouri, for $113.0 million in cash on a debt-free basis, subject to customary post-closing adjustments. The CableAmerica acquisition is expected to provide the Company opportunities for footprint expansion in Missouri, margin growth and potential cost synergy realization. The transaction is subject to customary closing conditions and is expected to be financed with cash on hand and close before the end of 2021.
Liquidity and Capital Resources
At September 30, 2021, the Company had $489.5 million of cash and cash equivalents on hand compared to $574.9 million at December 31, 2020. The Company’s debt balance was $3.9 billion and $2.2 billion at September 30, 2021 and December 31, 2020, respectively. The Company had $458.6 million available for borrowing under its revolving credit facility as of September 30, 2021.
The Company paid $16.6 million in dividends to stockholders during the third quarter of 2021.
Cable One (CABO) stock price history over the last 5 years
The image below shows the stock price history of Cable One (CABO) over the last 5 years. And its been a good time for Cable One stockholders with the stock increasing sharply by 189% over the last 5 years
The stock of Cable One is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of Cable One stock is negative at this point in time.
The stock of Cable One is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of Cable One stock is negative at this point in time.
Cable One (CABO) stock price history over the last 5 years
Latest stock valuation of Cable One (CABO)
So what is Cable One (CABO) stock worth based on their 3rd quarter 2021 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Cable One at $1230 a stock.
We therefore believe the stock of Cable One (CABO) is overvalued at its current price of $1767.10
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $1230.10, thus a good entry point into Cable One (CABO) would be at $1107 or below.
We expect the stock of Cable One (CABO) to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued.
We rate the stock of Cable One (CABO) as a sell
We therefore believe the stock of Cable One (CABO) is overvalued at its current price of $1767.10
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $1230.10, thus a good entry point into Cable One (CABO) would be at $1107 or below.
We expect the stock of Cable One (CABO) to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued.
We rate the stock of Cable One (CABO) as a sell
Next earnings release of Cable One (CABO)
It is expected that Cable One (CABO) will release their 4th quarter 2021 earnings report in early February 2021