What's Ahead For Cable ONE (CABO) This Earnings Season?

Cable ONE Inc. (NYSE:CABO) is slated to report second-quarter 2016 financial numbers on Aug 3, after market close.

Last quarter, the company posted a positive earnings surprise of 45.31%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 13.03%. Let’s see how things are shaping up for this announcement.

Factors at Play

Cable ONE is a cable TV company that could be an interesting play for investors because, not only does the stock have decent short-term momentum, but is seeing solid activity on the earnings estimate front as well.

Recently, the company launched its Gigabit service, GigaONE, which offers 40 times faster than the average speed. It offers Gigabit speeds to residential U.S. customers, thus facilitating the downloading of an HD movie within 60 seconds, 100 songs in four seconds and a game in 29 seconds. We are also impressed with the company’s efforts to reward shareholders through dividend payments. In May, Cable ONE declared a quarterly cash dividend of $1.50 for each share.

However, the company operates in a highly competitive market where it faces tough competition from leading cable multi-service-operators (MSO) in U.S. like Comcast Corp. (NASDAQ:CMCSA) and Charter Communications Inc. (NASDAQ:CHTR) .

Earnings Whispers

Our proven model does not conclusively show that Cable ONE is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Cable ONE has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $4.53.

Zacks Rank: Cable ONE has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stock to Consider

Here is a company to consider instead as our model shows that it has the right combination of elements to post an earnings beat this quarter.

LG Display Co. Ltd. (NYSE:LPL) , with an earnings ESP of +50.00% and a Zacks Rank #1.

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