Why Cable One, Inc. (NYSE:CABO) Could Be Worth Watching
Cable One, Inc. (NYSE:CABO), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$573 and falling to the lows of US$437. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cable One's current trading price of US$458 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cable One’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Cable One
What's The Opportunity In Cable One?
Great news for investors – Cable One is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $754.57, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that Cable One’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of Cable One look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Cable One. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although CABO is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to CABO, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on CABO for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
So while earnings quality is important, it's equally important to consider the risks facing Cable One at this point in time. To help with this, we've discovered 4 warning signs (2 are concerning!) that you ought to be aware of before buying any shares in Cable One.
If you are no longer interested in Cable One, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
