Cable One Reports Strong Earnings Growth: A Closer Look at Q4 2019

Ticker: CABO | Date: February 27, 2020

Cable One, Inc. (NYSE: CABO) recently released its fourth-quarter results for 2019, and let?s just say the numbers are looking pretty good?at least if you?re into revenue growth and increased net income. The company reported total revenues of $318.8 million, marking an impressive 18.1% increase from the previous year?s fourth quarter revenue of $269.9 million. This performance conveniently aligns with our expectations for a strong revenue forecast, defying any lingering fears of a downturn.

Impressive Earnings Performance

Net income soared by 27.6% year-over-year, reaching $53.6 million. Adjusted EBITDA came in at $158.3 million?a 24% increase, with a net profit margin of 16.8% and an Adjusted EBITDA margin of 49.7%. If you?re keeping score at home, that?s a favorable earnings surprise that should delight investors. The EPS consensus certainly didn?t see this coming!

Residential and Business Services: A Tale of Two Segments

Breaking it down further, residential data revenues climbed by 18.9%, while business services revenues skyrocketed by 41.6% year-over-year. It seems like Cable One is not only riding the wave of increased internet demand but is also skillfully navigating the often choppy waters of business services?a segment that has shown significant growth potential.

Residential data primary service units (PSUs) grew by over 94,000, or 15.7%, and business services PSUs increased by nearly 24,000, or 22.4%. It?s a double win for the company, as both segments are contributing robustly to overall growth. This bodes well for Cable One and hints that they might just continue their upward trend in the coming quarters.

Strategic Acquisitions Add to Momentum

The acquisition of Clearwave Communications earlier in 2019, followed by Fidelity Communications? data, video, and voice business, has clearly paid off. These acquisitions have contributed to the overall performance, which is reflected in the Q4 results. It?s a classic example of how strategic acquisitions can turn into a winning formula, not just for Cable One, but also setting a precedent in the sector for how companies can leverage growth through smart M&A activities.

Looking Ahead: What?s Next for CABO?

For investors and analysts, the question now is whether Cable One can maintain this momentum moving into 2020. Given the strong growth in both residential and business segments, along with a solid financial footing, there?s a reason to be cautiously optimistic. However, the competitive landscape remains fierce. Other players in the industry will undoubtedly be keeping a close eye on Cable One?s strategies and results.

While no one can predict the future with certainty (if only it were that easy!), the current trajectory suggests that Cable One is well-positioned to capitalize on the ongoing demand for high-quality internet services. As the company continues to innovate and expand its offerings, it could very well outperform its peers in the cable sector.