October 12, 2023
Top 10 Stock Cogent Communications Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Cogent Communications – Top 10 Stock in Dow Jones U.S. Telecommunications Index
Cogent Communications is listed as a top 10 stock on October 12, 2023 in the market index D.J. US Telecom because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 32 (32% performer), Obermatt assesses an overall hold recommendation for Cogent Communications on October 12, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Alternative Carriers |
| Index | NASDAQ, D.J. US Telecom |
| Size class | Medium |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Cogent Communications Hold
| 360 METRICS | October 12, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 97 |
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| SAFETY | ||||||||
| SAFETY | 20 |
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| SENTIMENT | ||||||||
| SENTIMENT | 49 |
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| 360° VIEW | ||||||||
| 360° VIEW | 32 |
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ANALYSIS: With an Obermatt 360° View of 32 (better than 32% compared with alternatives), overall professional sentiment and financial characteristics for the stock Cogent Communications are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Cogent Communications. The consolidated Growth Rank has a good rank of 97, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. It ranks higher than 97% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 14 means that the share price of Cogent Communications is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 86% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 20, which means that the company has a riskier financing structure than 80% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 49, indicating professional investors are more pessimistic about the stock than for 51% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 32, Cogent Communications is worse than 68% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 97), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 49), the company is rather risky when it comes to financing (Safety Rank of 20). The negative market view on Cogent Communications may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Cogent Communications compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Cogent Communications only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 49 (better than 49% compared with alternatives), overall professional sentiment and engagement for the stock Cogent Communications is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Cogent Communications. Analyst Opinions are at a rank of 62 (better than 62% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 96, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in Cogent Communications. Finally, the Professional Investors rank is 80, which means that currently, professional investors hold more stock in this company than in 80% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 49 (less encouraging than 51% compared with investment alternatives), Cogent Communications has a reputation among professional investors that is below that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 15, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 85% of competitors). This could mean future risks and should make investors careful. Attention to negative news for Cogent Communications is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: Cogent Communications Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 14 (worse than 86% compared with alternatives), Cogent Communications shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Cogent Communications. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 82% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 15 which means that the stock price compared with what market professionals expect for future profits is higher than 85% of comparable companies, indicating a low value concerning Cogent Communications's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 34 which means that the stock price compared with what market professionals expect for future profit levels is higher than 66% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 9 is also low. Compared with invested capital, the stock price is higher than for 91% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 14, is a sell recommendation based on Cogent Communications's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Cogent Communications? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Cogent Communications only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Cogent Communications Growth Momentum high
| GROWTH METRICS | October 12, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 98 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 100 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 28 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 79 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 97 |
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ANALYSIS: With an Obermatt Growth Rank of 97 (better than 97% compared with alternatives) for 2023, Cogent Communications shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Cogent Communications. Sales Growth has a rank of 98 which means that currently, professionals expect the company to grow more than 98% of its competitors. Both Profit Growth, with a rank of 100, and Stock Returns, with a rank of 79, are also above average. But Capital Growth only has a rank of 28, which means that, currently, professionals expect the company to grow its invested capital less than 72% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 97, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: Cogent Communications Debt Financing Safety risky
| SAFETY METRICS | October 12, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 1 |
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| REFINANCING | ||||||||
| REFINANCING | 74 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 23 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 20 |
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ANALYSIS: With an Obermatt Safety Rank of 20 (better than 20% compared with alternatives), the company Cogent Communications has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Cogent Communications is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Cogent Communications and the other two below average. Refinancing is at 74, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 74% of its competitors. But Leverage is high with a rank of 1, meaning the company has an above-average debt-to-equity ratio. It has more debt than 99% of its competitors. Liquidity is also on the riskier side with a rank of 23, meaning the company generates less profit to service its debt than 77% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 20 (worse than 80% compared with alternatives), Cogent Communications has a financing structure that is significantly riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for Cogent Communications are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more
Combined financial peformance: Cogent Communications Below-Average Financial Performance
| COMBINED PERFORMANCE | October 12, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 97 |
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| SAFETY | ||||||||
| SAFETY | 23 |
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| COMBINED | ||||||||
| COMBINED | 35 |
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ANALYSIS: With an Obermatt Combined Rank of 35 (worse than 65% compared with investment alternatives), Cogent Communications (Alternative Carriers, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Cogent Communications are low in value (priced high) with a consolidated Value Rank of 14 (worse than 86% of alternatives), and are riskily financed (Safety Rank of 20, which means above-average debt burdens) but show above-average growth (Growth Rank of 97). ...read more
RECOMMENDATION: A Combined Rank of 35, is a hold recommendation based on Cogent Communications's financial characteristics. As the company Cogent Communications shows low value with an Obermatt Value Rank of 14 (86% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 97% of comparable companies (Obermatt Growth Rank is 97). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 20 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Cogent Communications, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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