CGO reported an EPS of $2.40, beating estimates of $2.18, while revenues came in at $758
million, a 2.4% decrease compared to last year (3.9% on a constant currency basis) due to the
decline in the subscriber base. Adjusted EBITDA decreased slightly by 0.5% to $367.8 million.
CGO reported fine results, but the market is concerned with the fact that revenue declined by
around 3.9% on a constant currency basis for the quarter, and the company also revised its
projections, expecting revenue to decline by low single digits, compared to the previous
projection of flat growth.
CGO can be defined as a fairly cheap, stable cash cow with an attractive dividend yield. The company generates significant free cash flows, but the long-term growth prospects of the business are not attractive and are expected to gradually decline by 1%-2% over the next few years. For now, we think investors can give CGO some time to execute and be willing to sell if revenue continues its downward trend, but we think for investors who are seeking high dividend yields with a strong growth rate, we think there are better opportunities in the market elsewhere.