Cogent Communications Holdings, Inc. (NASDAQ: CCOI)

Sector: Communication Services Industry: Telecom Services CIK: 0001158324
Market Cap 1.22 Bn
P/B -8.18
P/E 42.52
P/S 2.34
ROIC (Qtr) -3.65
Div Yield % 7.99
Rev 1y % (Qtr) -5.93
Total Debt (Qtr) 2.65 Bn
Debt/Equity (Qtr) -67.61
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About

Cogent Communications Holdings, Inc., known by its stock symbol CCOI, is a company that operates in the telecommunications industry, offering facilities-based, low-cost, high-speed Internet access, private network services, and data center colocation space and power. The company has a global presence, operating in 54 countries across six continents, providing services to various businesses, communications service providers, and bandwidth-intensive organizations. Cogent generates revenue through its on-net and off-net services. On-net services include...

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Investment thesis

Bull case

  • Healthy cash reserves of 226.29M provide 2.82x coverage of short-term debt 80.12M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust tangible asset base of 2.68B provides 11.06x coverage of working capital 242.22M, indicating strong operational backing.
  • Tangible assets of 2.68B provide robust 20.76x coverage of other current liabilities 129.04M, indicating strong asset backing.
  • Retained earnings of (675.50M) represent substantial 17.25x of equity (39.17M), indicating strong internal capital generation.
  • Cash reserves of 226.29M provide robust 0.95x coverage of current liabilities 237.55M, indicating strong short-term solvency.

Bear case

  • Operating cash flow of 9.95M barely covers its investment activities of (96.64M), with a coverage ratio of -0.10, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 9.95M provides thin coverage of dividend payments of (196.18M) with a -0.05 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (186.70M) provides weak coverage of capital expenditures of 196.64M, with a -0.95 ratio suggesting additional external financing needs for growth initiatives.
  • The company's operating cash flow of 9.95M shows concerning coverage of stock compensation expenses of 28.96M, with a 0.34 ratio indicating potential earnings quality issues.
  • Operating earnings of (97.33M) show weak coverage of depreciation charges of 279.03M, with a -0.35 ratio indicating high capital intensity and potential reinvestment needs.

Scenario Breakdown of Revenue (2023)

Peer comparison

Companies in the Telecom Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TMUS T-Mobile US, Inc. 247.58 Bn 22.52 2.80 118.74 Bn
2 T At&T Inc. 210.50 Bn 12.86 1.15 155.04 Bn
3 VZ Verizon Communications Inc 202.20 Bn 11.00 1.54 181.64 Bn
4 CMCSA Comcast Corp 180.83 Bn 58.43 5.08 98.94 Bn
5 VOD Vodafone Group Public Ltd Co 44.88 Bn 3.20 0.62 60.54 Bn
6 CHT Chunghwa Telecom Co Ltd 33.41 Bn 26.87 4.32 1.20 Bn
7 SATS EchoStar CORP 32.60 Bn -2.52 2.15 30.58 Bn
8 CHTR Charter Communications, Inc. /Mo/ 32.03 Bn 6.42 0.58 96.20 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.55 0.87
EV to Cash from Ops. EV/CFO 12.90 7.73
EV to Debt EV to Debt 0.65 40.31
EV to EBIT EV/EBIT 18.69 2.24
EV to EBITDA EV/EBITDA 10.29 2.53
EV to Free Cash Flow [EV/FCF] EV/FCF 20.57 33.34
EV to Market Cap EV to Market Cap 1.42 1.71
EV to Revenue EV/Rev 3.32 5.12
Price to Book Value [P/B] P/B -8.18 2.16
Price to Earnings [P/E] P/E 42.52 76.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -0.99 -0.17
Dividend Payout Ratio % Div Payout % (Qtr) -99.10 2.05
Dividend per Basic Share Div per Share (Qtr) 4.03 0.79
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -103.10 8.04
Interest Coverage Int. cover (Qtr) -0.63 -2.53
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -2.15 19.27
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -28.41 61.85
Dividend Growth (1y) % Div 1y % (Qtr) 3.74 -2.07
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 39.22 373.65
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 137.30 192.47
EBIT Growth (1y) % EBIT 1y % (Qtr) -224.90 814.56
EBT Growth (1y) % EBT 1y % (Qtr) -915.67 -29.03
EPS Growth (1y) % EPS 1y % (Qtr) -627.27 141.81
FCF Growth (1y) % FCF 1y % (Qtr) 29.38 78.17
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.85 -10.71
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.31 0.60
Cash Payout Ratio Cash Payout (Qtr) 0.95 0.06
Cash Ratio Cash Ratio (Qtr) 0.95 0.68
Current Ratio Curr Ratio (Qtr) 2.02 1.56
Debt to Equity Ratio Debt/Equity (Qtr) -67.61 -0.46
Interest Cover Ratio Int Coverage (Qtr) -0.63 -2.53
Times Interest Earned Times Interest Earned (Qtr) -0.63 -2.53
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 18.40 46.49
EBIT Margin % EBIT Margin % (Qtr) -9.86 -51.60
EBT Margin % EBT Margin % (Qtr) -25.56 27.73
Gross Margin % Gross Margin % (Qtr) 43.10 55.49
Net Profit Margin % Net Margin % (Qtr) -19.70 26.33