CABO
Cable One, Inc.
Communication Services · Telecommunications Services
Deeply Undervalued·Quality 65·RSI 48·DCF +2570%·Conviction 75
Investment Thesis — Cable One, Inc.
The market is mispricing Cable One as a failing legacy operator, fixated on negative GAAP EPS and sector headwinds, while overlooking the robust, cash-generative nature of its niche broadband business in less competitive markets. This creates an extreme disconnect between its implied future earnings power and current valuation.
Catalysts
- Strong Q1/Q2 earnings report demonstrating positive free cash flow and reaffirming dividend sustainability.
- Announcement of a strategic review or M&A interest, highlighting the value of its broadband assets.
- Significant reduction in short interest as the market recognizes underlying value.
Risk Factors
- Further deterioration in subscriber numbers or increased competition leading to pricing pressure.
- Dividend cut or suspension due to inability to cover from free cash flow.
- Higher-than-expected capital expenditures for network upgrades, straining cash flow.
Key Debates
CABO's 4.24x P/E expands to 8x by Q4 as revenue stabilizes
22% short float triggers 30%+ short squeeze by Q3 2024
Revenue decline stabilizes to flat by Q4, preventing dividend cut