Critical Review: Cogent Communications (CCOI) & Its Peers

Cogent Communications (NASDAQ: CCOI) is one of 48 public companies in the “Integrated Telecommunications Services” industry, but how does it weigh in compared to its competitors? We will compare Cogent Communications to similar businesses based on the strength of its dividends, risk, valuation, profitability, earnings, institutional ownership and analyst recommendations.

Risk & Volatility

Cogent Communications has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Cogent Communications’ competitors have a beta of 0.96, suggesting that their average share price is 4% less volatile than the S&P 500.

Earnings & Valuation

This table compares Cogent Communications and its competitors revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Cogent Communications $446.90 million $14.92 million 124.17
Cogent Communications Competitors $16.60 billion $1.32 billion 13.10

Cogent Communications’ competitors have higher revenue and earnings than Cogent Communications. Cogent Communications is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Cogent Communications and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cogent Communications 3.37% -23.86% 2.18%
Cogent Communications Competitors 2.39% -0.81% 2.02%

Dividends

Cogent Communications pays an annual dividend of $1.92 per share and has a dividend yield of 4.3%. Cogent Communications pays out 533.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Integrated Telecommunications Services” companies pay a dividend yield of 4.3% and pay out 576.9% of their earnings in the form of a dividend. Cogent Communications is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Cogent Communications and its competitors, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cogent Communications 5 6 4 0 1.93
Cogent Communications Competitors 592 1699 2023 66 2.36

Cogent Communications presently has a consensus price target of $42.67, suggesting a potential downside of 4.55%. As a group, “Integrated Telecommunications Services” companies have a potential upside of 68.61%. Given Cogent Communications’ competitors stronger consensus rating and higher possible upside, analysts plainly believe Cogent Communications has less favorable growth aspects than its competitors.

Insider & Institutional Ownership

95.6% of Cogent Communications shares are owned by institutional investors. Comparatively, 60.1% of shares of all “Integrated Telecommunications Services” companies are owned by institutional investors. 9.5% of Cogent Communications shares are owned by company insiders. Comparatively, 5.0% of shares of all “Integrated Telecommunications Services” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Cogent Communications competitors beat Cogent Communications on 8 of the 15 factors compared.

Cogent Communications Company Profile

Cogent Communications Holdings, Inc. is a facilities-based provider of Internet access and Internet Protocol (IP), communications services. The Company’s network is specifically designed and optimized to transmit data using IP. The Company delivers its services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in North America, Europe and in Japan. The Company offers on-net services in over 175 metropolitan markets. The Company serves 1,990 on-net buildings. The Company’s on-net service in North America is its Fast Ethernet service, which provides Internet access at 100 megabits per second. It also offers Internet access services at higher speeds of up to ten Gigabits per second. These services are generally used by customers that have businesses, such as Web hosting, that are Internet-based.

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