Shareholders of Cable One, Inc. (NYSE:CABO) will be pleased this week, given that the stock price is up 12% to US$1,936 following its latest third-quarter results. Cable One reported US$339m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$10.96 beat expectations, being 2.8% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Cable One's seven analysts are now forecasting revenues of US$1.39b in 2021. This would be a modest 6.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 16% to US$50.10. In the lead-up to this report, the analysts had been modelling revenues of US$1.39b and earnings per share (EPS) of US$47.55 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.0% to US$1,944. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Cable One analyst has a price target of US$2,280 per share, while the most pessimistic values it at US$1,600. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Cable One's revenue growth will slow down substantially, with revenues next year expected to grow 6.5%, compared to a historical growth rate of 10% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% next year. So it's pretty clear that, while Cable One's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Cable One's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Cable One going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Cable One that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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