Roku (ROKU) & Cable One (NYSE:CABO) Critical Contrast

Cable One (NYSE:CABO) and Roku (NASDAQ:ROKU) are both mid-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Cable One and Roku, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cable One 0 4 1 0 2.20
Roku 0 4 9 0 2.69

Cable One presently has a consensus price target of $800.50, indicating a potential downside of 5.94%. Roku has a consensus price target of $66.92, indicating a potential upside of 66.25%. Given Roku’s stronger consensus rating and higher possible upside, analysts plainly believe Roku is more favorable than Cable One.

Risk and Volatility

Cable One has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500. Comparatively, Roku has a beta of 3.59, suggesting that its stock price is 259% more volatile than the S&P 500.

Profitability

This table compares Cable One and Roku’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cable One 25.08% 22.03% 6.99%
Roku -1.33% -4.46% -2.25%

Valuation & Earnings

This table compares Cable One and Roku’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cable One $960.03 million 5.05 $234.02 million $21.61 39.38
Roku $512.76 million 8.57 -$63.50 million ($2.24) -17.97

Cable One has higher revenue and earnings than Roku. Roku is trading at a lower price-to-earnings ratio than Cable One, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

80.5% of Cable One shares are owned by institutional investors. Comparatively, 40.1% of Roku shares are owned by institutional investors. 1.1% of Cable One shares are owned by company insiders. Comparatively, 0.6% of Roku shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Cable One pays an annual dividend of $8.00 per share and has a dividend yield of 0.9%. Roku does not pay a dividend. Cable One pays out 37.0% of its earnings in the form of a dividend. Cable One has raised its dividend for 2 consecutive years.

Summary

Cable One beats Roku on 11 of the 17 factors compared between the two stocks.

Cable One Company Profile

Cable One, Inc. owns and operates cable systems that provide data, video, and voice services in the United States. The company offers data services, including home.cableone.net, an Internet portal that provides various email addresses; and WiFi ONE, a Wi-Fi solution to enhance Wi-Fi signal throughout the home. It also provides video services, such as basic video services comprising local networks; local community programming that include governmental and public access; and other channels, which comprise weather, shopping, and religious channels, as well as digital video services, including national and regional cable networks, music channels, and an interactive electronic programming guide with parental controls. In addition, the company offers premium channels; and advanced video services, such as whole-home DVRs and high-definition set-top boxes, as well as TV Everywhere product, which enables its video customers to stream various channels and shows to mobile devices and computers. Further, it provides voice and international calling by the minute services; and a suite of digital advertising products comprising Website construction, targeted display, and short- and long-form video production. As of March 1, 2018, the company served approximately 800,000 residential and business customers in 21 Western, Midwestern, and Southern states. Cable One, Inc. was founded in 1986 and is headquartered in Phoenix, Arizona.

Roku Company Profile

Roku, Inc. operates a TV streaming platform. The company operates in two segments, Player and Platform. Its platform allows users to search, discover, and access approximately 500,000 movies and TV episodes, as well as live sports, music, news, and others. As of December 31, 2017, the company had 19.3 million active accounts. It also provides advertising products, including videos ads, interactive video ads, audience development promotions, and brand sponsorships; and manufactures, sells, and licenses TVs under the Roku TV name. In addition, the company offers streaming media players and accessories under the Roku brand that allow users to access its TV streaming platform; and sells branded channel buttons on remote controls. It provides its products and services through retailers and distributors, as well as directly to customers through its Website in the United States, Canada, the United Kingdom, France, the Republic of Ireland, and various Latin American countries. The company was founded in 2002 and is headquartered in Los Gatos, California.

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