Internet, cable TV, and phone provider Cable One (NYSE: CABO) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 5.9% year on year to $380.6 million. Its GAAP profit of $0.46 per share was 94.3% below analysts’ consensus estimates.
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Cable One (CABO) Q1 CY2025 Highlights:
- Revenue: $380.6 million vs analyst estimates of $386.3 million (5.9% year-on-year decline, 1.5% miss)
- EPS (GAAP): $0.46 vs analyst expectations of $8.00 (94.3% miss)
- Adjusted EBITDA: $202.7 million vs analyst estimates of $206.2 million (53.3% margin, 1.7% miss)
- Operating Margin: 25.1%, down from 29.6% in the same quarter last year
- Free Cash Flow Margin: 11.9%, down from 24.5% in the same quarter last year
- Residential Data Subscribers: 945,000, down 121,400 year on year
- Market Capitalization: $1.50 billion
Company Overview
Founded in 1986, Cable One (NYSE: CABO) provides high-speed internet, cable television, and telephone services, primarily in smaller markets across the United States.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Cable One’s 5.1% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector and is a tough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Cable One’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 4.4% annually. 
We can better understand the company’s revenue dynamics by analyzing its number of residential data subscribers and residential video subscribers, which clocked in at 945,000 and 101,300 in the latest quarter. Over the last two years, Cable One’s residential data subscribers averaged 1.4% year-on-year declines while its residential video subscribers averaged 22.6% year-on-year declines. 
This quarter, Cable One missed Wall Street’s estimates and reported a rather uninspiring 5.9% year-on-year revenue decline, generating $380.6 million of revenue.
Looking ahead, sell-side analysts expect revenue to decline by 1.5% over the next 12 months. While this projection is better than its two-year trend, it's tough to feel optimistic about a company facing demand difficulties.
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Operating Margin
Cable One’s operating margin has been trending down over the last 12 months, but it still averaged 29% over the last two years, elite for a consumer discretionary business. This shows it’s an well-run company with an efficient cost structure.
In Q1, Cable One generated an operating profit margin of 25.1%, down 4.5 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Cable One, its EPS declined by 16.1% annually over the last five years while its revenue grew by 5.1%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.
In Q1, Cable One reported EPS at $0.46, down from $6.46 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Cable One’s full-year EPS of negative $4.09 will flip to positive $30.42.
Key Takeaways from Cable One’s Q1 Results
We struggled to find many positives in these results. Its number of residential data subscribers missed along with its revenue, EPS, and EBITDA. Overall, this was a weaker quarter. The stock traded down 10.5% to $235.00 immediately following the results.
Cable One may have had a tough quarter, but does that actually create an opportunity to invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
