Raymond James downgraded Cable One (NYSE: CABO) from “Outperform” to “Market Perform” after a disappointing first quarter that exposed multiple operational headwinds and led to the suspension of its dividend.
📌 Revenue for Q1 2025 declined 5.9% year-over-year to \$380.6 million, with net income plunging by 93% to just \$2.6 million. The steep drop was largely due to a \$28 million non-cash impairment charge tied to an equity method investment. Adjusted EBITDA also slipped 6.6% to \$202.7 million, with EBITDA margins tightening to 53.3%.
📌 The company reported a 4.6% year-over-year decline in primary service units (PSUs), including drops in both residential data and video segments, reflecting broader subscriber losses across its network.
📌 Cable One previously maintained a quarterly dividend of \$2.85 per share, translating to a yield of about 1.7% at recent share prices near \$669. This payout was unusually high relative to its historical average, sitting more than two standard deviations above its five-year norm. The payout ratio stood at 0.61, indicating a moderate commitment to shareholder returns.
📌 In a strategic pivot, Cable One has suspended its dividend and announced plans to redirect approximately \$200 million over three years toward debt reduction and growth investments. The decision underscores a shift in capital priorities amid growing competitive and financial pressure.
📌 The downgrade by Raymond James reflects heightened caution around the company’s earnings trajectory, margin stability, and long-term capital allocation plans. Investors are watching closely to see whether these strategic changes can reinvigorate growth or if deeper structural challenges remain.