Cable ONE (CABO) Beats Q2 Earnings & Revenue Estimates

Small-sized cable MSO (multi service operator) Cable ONE Inc. (NYSE:CABO) reported strong financial results in the second quarter of 2016. Both the top and the bottom line surpassed the respective Zacks Consensus Estimate.

GAAP net income in the reported quarter was $26.6 million or $4.62 per share compared with a net income of $21.4 million or $3.67 per share in the year-ago quarter. Second quarter earnings per share of $4.62 outpaced the Zacks Consensus Estimate of $4.53.

Total revenue was $204.6 million, up 0.9% year over year and ahead of the Zacks Consensus Estimate of $201 million. Of the total, Residential Data revenues were approximately $86 million, up 18.7%. Residential Video revenues were $74 million, down 14.2%. Residential Voice revenues were $10.9 million, down 11.5%. Business Services segment generated $24.5 million revenues, up 12%. Advertising sales were $6.6 million, down 9.6%. Other revenues were $2.5 million, up 0.9%.

In the reported quarter, operating expenses totaled $154 million, down 7.7% year over year. Operating income was $50.6 million, up a substantial 41.3% year over year. Adjusted EBITDA was $88.9 million, up 14.6% year over year. Adjusted EBITDA margin was 43.5% compared with 38.3% in the year-ago quarter.

Cash Flow

In the second quarter of 2016, Cable ONE generated a little over $48 million of cash from operation compared with $61.5 million in the prior-year quarter. However, free cash flow in the reported quarter was $51.3 million versus $40 million in the year-ago quarter.

Liquidity

At the end of the second quarter of 2016, Cable ONE had $102.7 million of cash and cash equivalents compared with $119.2 million at the end of 2015.

Operating Statistics

As of Jun 30, 2016, the total customer base of Cable ONE was 659,943, down 1.8% year over year. Non-video customer base was 316,745, up 17.1% year over year. Non-video customers accounted for 48% of total customers compared with 40% at the end of the year-ago quarter.

Residential Segment: Total customers were 610,293, down 2.7% year over year. Data customers were 465,603, up 1.8%. Video customers were 324,982, down 15.6%. Voice customers totaled 103,806, down 13.9%. PSU customers were 894,391, down 7.1%.

Business Segment: Total customers were 49,650, up 10.9% year over year. Data customers were 42,714, up 7.8%. Video customers were 13,992, down 5.1%. Voice customers totaled 17,134, down 5.4%. PSU customers were 73,840, up 1.9%.

Average Revenue Per User (ARPU): Residential data ARPU was $61.49, up 16.4%. Residential video ARPU was $74.59, up 2.7%. Residential voice ARPU was $34.55, up 3.1%. Business services ARPU was $166.61, up 0.5%. Total customer ARPU was $102.88, up 2.8%.

Zacks Rank & Stocks to Consider

Cable ONE currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Liberty Broadband Corp. (NASDAQ:LBRDA) , Liberty LiLAC Group (NASDAQ:LILA) and Cincinnati Bell Inc. (NYSE:CBB) . All three stocks currently carry a Zacks Rank #2 (Buy).