Cogent Comms (CCOI) AI Stock Analysis

• Market Cap: $2.96B
• Dividend Yield: 6.59%
• Average Volume (3M): 475.53K
• Price to Earnings (P/E): 102.8
• Beta (1Y): 0.64
• Revenue Growth: 10.12%
• EPS Growth: -115.93%
• Country: US
• Employees: 1,916
• Sector: Communication Services
• Sector Strength: 59
• Industry: Telecommunications Services
• EPS (TTM): -4.30
• Shares Outstanding: 49,325,993
• 10 Day Avg. Volume: 559,337
• 30 Day Avg. Volume: 475,530
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.45
• Price to Cash Flow (P/CF): 58.00
• P/FCF Ratio: 17.10
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $82.25
• Price Target Upside: 44.50% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4

Cogent Comms' stock score is primarily impacted by weak financial performance due to unstable income and high leverage. Technical indicators suggest bearish trends, while valuation concerns persist despite a high dividend yield. Positive factors include strategic efforts highlighted in the earnings call and corporate events, which reflect growth in certain revenue streams and executive alignment with performance goals. Overall, the stock faces challenges that need addressing for a more favorable outlook.

Positive Factors

Asset Monetization

Potential monetization of underutilized data center and IPv4 assets could generate significant proceeds and reduce net debt.

Data Center Expansion

Management reached its target of 800 wave-ready data centers, and will actually have 880 data centers.

IPv4 Business Performance

The IPv4 business delivered upside with bullish commentary on higher volumes and price hikes.

Negative Factors

Execution Risks

Scaling in waves has been slower, which is a key driver of sentiment and contributes to execution risk.

Valuation vs. Realization

The acceleration of the wavelength business remains a longer-term goal, with current valuation surpassing the pace of realization.

Waves Launch

The Waves launch is clearly off to a slow start.

Cogent Comms Business Overview & Revenue Model

Company Description

Cogent Communications Holdings, Inc., through its subsidiaries, provides high-speed Internet access, private network, and data center colocation space services in North America, Europe, Asia, South America, Australia, and Africa. The company offers on-net Internet access and private network services to law firms, financial services firms, and advertising and marketing firms, as well as heath care providers, educational institutions and other professional services businesses, other Internet service providers, telephone companies, cable television companies, Web hosting companies, media service providers, mobile phone operators, content delivery network companies, and commercial content and application service providers. It also provides Internet access and private network services to customers that are not located in buildings directly connected to its network; and on-net services to customers located in buildings that are physically connected to its network. In addition, the company offers off-net services to corporate customers using other carriers' circuits to provide the last mile portion of the link from the customers' premises to the network. Further, it operates data centers that allow its customers to collocate their equipment and access the network. The company operates 54 data centers and provides facilities to 3,035 buildings and on-net services to 1,817 to multi-tenant office buildings. It serves primarily to small and medium-sized businesses, communications service providers, and other bandwidth-intensive organizations. Cogent Communications Holdings, Inc. was founded in 1999 and is headquartered in Washington, the District of Columbia.

How the Company Makes Money

Cogent Communications primarily generates revenue through the provision of internet access and data transport services. Its key revenue streams include selling dedicated internet access to business customers, providing virtual private network (VPN) services, and offering colocation and data center services where clients can house their servers and network equipment. Additionally, Cogent earns revenue from interconnections with other internet service providers. The company benefits from its strategic presence in numerous high-demand markets and data centers worldwide, allowing it to cater to a wide array of industries and maintain a steady revenue flow. Significant partnerships with various telecommunications carriers and content delivery networks further bolster its market position and revenue potential.

Cogent Comms Financial Statement Overview

Summary

Cogent Comms faces significant financial challenges, characterized by unstable income and cash flow, combined with a highly leveraged balance sheet. The lack of recent revenue data adds further uncertainty. Strategic improvements in profitability and debt management are critical to enhancing financial health.

Income Statement

Cogent Comms has shown inconsistent profitability with a significant net loss in the latest year. The absence of revenue data for the latest period prevents calculation of current margins, but past data shows volatile EBIT and EBITDA margins. The company experienced revenue growth until 2023, but the lack of current revenue details raises concerns about recent performance.

Balance Sheet

The balance sheet indicates a challenging financial position with negative stockholders' equity, suggesting a high degree of leverage. The consistently negative equity raises concerns about long-term financial stability. The debt-to-equity ratio is not calculable due to negative equity, but the high total debt suggests significant leverage risks.

Cash Flow

Cash flow analysis shows negative free cash flow in the latest year, reflecting difficulties in generating cash. Operating cash flow is negative, indicating challenges in sustaining operational cash requirements. Previous years show fluctuating free cash flow, highlighting instability in cash generation.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
783.81M	940.92M	599.60M	589.80M	568.10M
	Gross Profit
152.23M	396.69M	371.45M	363.46M	348.95M
	EBIT
-239.03M	-129.33M	113.96M	119.23M	106.92M
	EBITDA
169.60M	1.56B	208.43M	201.08M	190.47M
	Net Income Common Stockholders
-204.07M	1.27B	5.15M	48.19M	6.22M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
15.34M	75.09M	223.78M	319.61M	371.30M
	Total Assets
3.17B	3.21B	1.01B	984.56M	1.00B
	Total Debt
416.15M	1.83B	1.36B	1.26B	1.21B
	Net Debt
400.82M	1.75B	1.13B	941.67M	839.96M
	Total Liabilities
2.95B	2.60B	1.53B	1.36B	1.29B
	Stockholders Equity
222.85M	609.56M	-518.63M	-373.10M	-293.17M
Cash Flow		Free Cash Flow
-8.64M	-112.29M	94.74M	100.34M	84.37M
	Operating Cash Flow
-8.64M	17.34M	173.71M	170.26M	140.32M
	Investing Cash Flow
21.49M	76.73M	-78.97M	-69.92M	-55.95M
	Financing Cash Flow
105.92M	-257.85M	-144.85M	-140.82M	-116.00M

Cogent Comms Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 56.92
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CCOI, the sentiment is Negative. The current price of 56.92 is below the 20-day moving average (MA) of 65.57, below the 50-day MA of 71.96, and below the 200-day MA of 71.38, indicating a bearish trend. The MACD of -3.19 indicates Positive momentum. The RSI at 23.65 is Positive, neither overbought nor oversold. The STOCH value of 7.89 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CCOI.

Cogent Comms Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ZD	64 Neutral	$1.52B	26.38	3.40%	―	2.76%	58.98%
TDS	64 Neutral	$4.05B	―	-0.54%	0.42%	-3.80%	83.27%
Sector *	59 Neutral	$27.83B	1.88	-18.16%	4.00%	2.13%	-44.45%
SBGI	56 Neutral	$979.76M	3.14	71.43%	6.78%	13.21%	―
CCOI	47 Neutral	$2.96B	102.75	-49.03%	6.59%	10.12%	-115.93%
GSAT	46 Neutral	$2.49B	―	-17.12%	―	11.86%	-140.69%
SHEN	41 Neutral	$699.97M	―	-4.05%	0.78%	14.16%	-443.30%

Cogent Comms Corporate Events

Cogent Comms Extends CEO Contract with New Incentives

On January 14, 2025, Cogent Communications announced an amendment to CEO David Schaeffer’s employment agreement, extending his term until December 31, 2027. The amendment includes a long-term equity compensation plan and sets parameters for Schaeffer’s annual cash incentive award, which targets $500,000 and caps at $667,000. Key performance indicators for this incentive are tied to the company’s Annualized Wavelength Revenue and Gross Profit growth rates. Furthermore, the amendment outlines significant restricted stock awards for Schaeffer, with vesting conditions based on the company’s EBITDA and Free Cash Flow growth. These strategic moves aim to align executive incentives with company performance, potentially impacting stakeholders by driving operational growth and enhancing industry positioning.