Cable One's Q3 Earnings: Revenue In Line, EPS Misses Expectations

Cable One (NYSE:CABO), a leading broadband communications provider, reported its third-quarter 2024 earnings results on November 7, 2024. The company's revenue met analyst expectations, while earnings per share (EPS) fell short. Let's delve into the key financial highlights and analyze the implications for investors.

**Revenue and EPS Performance**

Cable One's revenue for the quarter was $393.6 million, in line with analyst estimates of $391.2 million. However, EPS came in at $7.58, missing analyst expectations of $9.01 by 15.9%. The earnings miss was primarily driven by a higher effective tax rate and increased interest expense.



**EBITDA and Margin Trends**

Cable One's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter were $213.6 million, beating analyst estimates of $210.6 million by 1.4%. The company's EBITDA margin remained strong at 54.3%, in line with the same quarter last year. This demonstrates Cable One's ability to maintain profitability despite the revenue miss.



**Residential Data Subscribers and Churn**

Cable One ended the quarter with 959,800 residential data subscribers, reflecting a net loss of approximately 3,400 subscribers sequentially. The company attributed this to the expiration of the Affordable Connectivity Program (ACP) and a small acquisition. Despite the subscriber loss, Cable One's average revenue per unit (ARPU) stabilized during the quarter, indicating that the company is well-positioned to navigate the evolving competitive landscape.

**Cash Flow and Capital Expenditures**

Cable One generated $176.2 million in net cash provided by operating activities during the quarter, down from $180.2 million in the prior year quarter. Capital expenditures totaled $77.0 million, compared to $77.8 million in the prior year quarter. Adjusted EBITDA less capital expenditures for the quarter was $136.6 million, down from $152.2 million in the prior year quarter.

**Investment Thesis**

Cable One's Q3 earnings results demonstrate the company's ability to maintain revenue growth despite challenges in the residential data subscriber base. The company's strong EBITDA margin and stable ARPU indicate that its business model remains resilient. Although EPS missed analyst expectations, Cable One's solid cash flow generation and commitment to returning capital to shareholders through dividends make it an attractive investment opportunity for income-oriented investors.

In conclusion, Cable One's Q3 earnings results show that the company is well-positioned to navigate the competitive landscape and deliver long-term value to shareholders. Despite the EPS miss, the company's strong EBITDA margin and cash flow generation make it an attractive investment option for those seeking a balance of value and growth.