Cogent Communications Stock To $17?
Cogent Communications (CCOI) stock has fallen 14% during the past day, and is currently trading at $16.98. Our multi-factor assessment suggests that it may be time to sell CCOI stock. We have, overall, a pessimistic view of the stock, and a price of $17 may not be out of reach. We believe there are several things to fear in CCOI stock given its overall Very Weak operating performance and financial condition. Hence, despite its Very Low valuation, we think that the stock is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very Low |
| What you get: | |
| Growth | Weak |
| Profitability | Very Weak |
| Financial Stability | Very Weak |
| Downturn Resilience | Very Weak |
| Operating Performance | Very Weak |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $808 Mil in market cap, Cogent Communications provides high-speed Internet, private network, and data center colocation services across six continents, operating 54 data centers and serving thousands of buildings worldwide.
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[1] Valuation Looks Very Low
| CCOI | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 0.8 | 3.1 |
| Price-to-Earnings Ratio | -4.1 | 22.9 |
| Price-to-Free Cash Flow Ratio | -4.3 | 19.7 |
This table highlights how CCOI is valued vs broader market. For more details see: CCOI Valuation Ratios
[2] Growth Is Weak
- Cogent Communications has seen its top line grow at an average rate of 20.1% over the last 3 years
- Its revenues have fallen -6.5% from $1.1 Bil to $988 Mil in the last 12 months
- Also, its quarterly revenues declined -5.9% to $242 Mil in the most recent quarter from $257 Mil a year ago.
| CCOI | S&P 500 | |
|---|---|---|
| 3-Year Average | 20.1% | 5.5% |
| Latest Twelve Months* | -6.5% | 6.1% |
| Most Recent Quarter (YoY)* | -5.9% | 7.1% |
This table highlights how CCOI is growing vs broader market. For more details see: CCOI Revenue Comparison
[3] Profitability Appears Very Weak
- CCOI last 12 month operating income was $-126 Mil representing operating margin of -12.7%
- With cash flow margin of 1.0%, it generated nearly $9.9 Mil in operating cash flow over this period
- For the same period, CCOI generated nearly $-195 Mil in net income, suggesting net margin of about -19.7%
| CCOI | S&P 500 | |
|---|---|---|
| Current Operating Margin | -12.7% | 18.8% |
| Current OCF Margin | 1.0% | 20.5% |
| Current Net Income Margin | -19.7% | 13.1% |
This table highlights how CCOI profitability vs broader market. For more details see: CCOI Operating Income Comparison
[4] Financial Stability Looks Very Weak
- CCOI Debt was $2.6 Bil at the end of the most recent quarter, while its current Market Cap is $808 Mil. This implies Debt-to-Equity Ratio of 329.7%
- CCOI Cash (including cash equivalents) makes up $147 Mil of $3.1 Bil in total Assets. This yields a Cash-to-Assets Ratio of 4.7%
| CCOI | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 329.7% | 21.2% |
| Current Cash-to-Assets Ratio | 4.7% | 7.0% |
[5] Downturn Resilience Is Very Weak
CCOI has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- CCOI stock fell 38.7% from a high of $80.27 on 16 November 2021 to $49.18 on 12 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 28 February 2024
- Since then, the stock increased to a high of $85.35 on 7 November 2024 , and currently trades at $16.98
| CCOI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -38.7% | -25.4% |
| Time to Full Recovery | 504 days | 464 days |
2020 Covid Pandemic
- CCOI stock fell 40.0% from a high of $90.11 on 31 July 2020 to $54.09 on 6 November 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
| CCOI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -40.0% | -33.9% |
| Time to Full Recovery | Not Fully Recovered | 148 days |
2008 Global Financial Crisis
- CCOI stock fell 89.9% from a high of $34.61 on 19 July 2007 to $3.51 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 18 October 2013
| CCOI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -89.9% | -56.8% |
| Time to Full Recovery | 1793 days | 1480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CCOI Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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