Cogent Communications Holdings, Inc. – Value Analysis (NASDAQ:CCOI) : November 6, 2017

Capitalcube gives Cogent Communications Holdings, Inc. a score of 66.

Our analysis is based on comparing Cogent Communications Holdings, Inc. with the following peers – Lumos Networks Corp., Fusion Telecommunications International, Inc., Pareteum Corporation, Straight Path Communications, Inc. Class B and Cisco Systems, Inc. (LMOS-US, FSNN-US, TEUM-US, STRP-US and CSCO-US).

Investment Outlook

Cogent Communications Holdings, Inc. has a fundamental score of 66 and has a relative valuation of OVERVALUED.

Fundamental Score

Access our research and ratings on Cogent Communications Holdings, Inc.

Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • Cogent Communications Holdings Inc currently has a negative book value but trades at a higher Price/Asset ratio (2.68) than its peer median (1.43).
  • CCOI-US‘s book value of equity is not positive and suggests that that it is not meaningful to analyze its ROE versus P/E in order to determine whether the company has an operating or growth advantage.
  • CCOI-US has a successful operating model with relatively high net profit margins and asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • CCOI-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • Compared with the peers chosen, CCOI-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • CCOI-US seems too levered to raise additional debt.

Access our research and ratings on Cogent Communications Holdings, Inc.

Leverage & Liquidity

CCOI-US would seem to have a hard time raising additional debt.

  • With debt at a relatively high 30.41% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 40.61%), and relatively tight interest coverage level of 1.41x, CCOI-US would have a hard time raising much additional debt. The company has a Constrained profile in terms of its ability to take on further debt.
  • All 5 peers for the company have an outstanding debt balance.

CCOI-US has maintained its Limited Flexibility profile from the recent year-end.

  • CCOI-US‘s interest coverage is similar to last year’s high of 1.47x, which compares to a low of 0.85x in 2012.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (1.41x) and the peer median (0.03x).
  • CCOI-US‘s debt-EV is greater than (but within one standard deviation of) its five-year average debt-EV of 29.59%.
  • Though its debt-EV has remained relatively stable at 30.41% compared to 2016, its peer median has increased to 40.61% from 29.22% during this period.
  • Relative to peers, debt-EV fell 11.39 percentage points (and is now lower than its peer median).

Access the detailed analysis for Cogent Communications Holdings, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Lumos Networks Corp. 54.36 1.36 0.98 14.89
Fusion Telecommunications International, Inc. 76.25 0.49 -0.98 1.49
Pareteum Corporation 50.81 0.24 -0.9 -46.94
Straight Path Communications, Inc. Class B 0.49 0.47 -7.74 -652.74
Cisco Systems, Inc. 28.03 3.03 14.94 42.62
Cogent Communications Holdings Inc 30.41 4.22 1.41 15.71
Peer Median 40.61 0.92 0.04 8.19
Best In Class 0.49 4.22 14.94 42.62

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Company Profile

Cogent Communications Holdings, Inc. engages in the provision of Internet access and Internet Protocol communications services. It offers Internet access and data transport through its fiber optic, IP data-only network, along with collocation in any of its Internet data centers. The company was founded by David Schaeffer in August 1999 and is headquartered in Washington, DC.

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