CABO

We rate Cable One, Inc. (CABO) as a Reduce with a composite score of 40.6/100 at a current price of $94.35. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (72th percentile) and quality (49th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (7th percentile) and stability (26th percentile) tempers our overall conviction. We assign a No Moat rating (31/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Cable One, Inc. holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 40.6/100 places it at rank #3470 in our full 7,333-stock universe. At $997M in market capitalization, Cable One, Inc. is a small-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -5% combined with momentum at the 7th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 100% (+44.9pp vs sector) narrow to operating margins of -13% (-30.1pp vs sector) and net margins of -20.0%, yielding a gross-to-net conversion rate of -20%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $94.35, Cable One, Inc. appears undervalued relative to its fundamentals. Our value factor score of 72/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 6.5x (a 61% discount to the sector median of 16.9x), EV/EBITDA of 25.7x (at a premium), P/B of 0.4x, P/S of 0.4x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Very High uncertainty rating to Cable One, Inc.. The stock exhibits multiple compounding risk factors: significant leverage (230% debt-to-equity), current negative profitability (net margin -20.0%), below-average price stability (26th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: significant leverage (230% debt-to-equity); current negative profitability (net margin -20.0%); below-average price stability (26th percentile); low beta of 0.69 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 26th percentile and quality factor at the 49th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures; a 6.66% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Cable One, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-21.3%), elevated leverage (230% D/E), negative profitability, weak asset returns (ROA -5.3%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Cable One, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Cable One, Inc. receives a Reduce rating with a composite score of 40.6/100 (rank #3470 of 7,333). Our quantitative framework assigns a No Moat (31/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 37/100.

Our analysis does not support a constructive view on Cable One, Inc. at this time. The combination of limited competitive advantages, very high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.