Financial Comparison: Cogent Communications (CCOI) versus IDT (IDT)

Cogent Communications (NASDAQ: CCOI) and IDT (NYSE:IDT) are both telecommunications services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.

Dividends

Cogent Communications pays an annual dividend of $1.92 per share and has a dividend yield of 4.3%. IDT pays an annual dividend of $0.76 per share and has a dividend yield of 7.1%. Cogent Communications pays out 548.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. IDT pays out -115.2% of its earnings in the form of a dividend. IDT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Cogent Communications and IDT’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cogent Communications $446.90 million 4.56 $14.92 million $0.35 126.57
IDT $1.50 billion 0.18 $8.17 million ($0.66) -16.20

Cogent Communications has higher earnings, but lower revenue than IDT. IDT is trading at a lower price-to-earnings ratio than Cogent Communications, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Cogent Communications has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, IDT has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Profitability

This table compares Cogent Communications and IDT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cogent Communications 3.37% -23.86% 2.18%
IDT -1.03% 7.53% 2.31%

Analyst Recommendations

This is a summary of recent ratings for Cogent Communications and IDT, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cogent Communications 5 6 4 0 1.93
IDT 0 0 0 0 N/A

Cogent Communications presently has a consensus target price of $42.67, suggesting a potential downside of 3.69%. Given Cogent Communications’ higher possible upside, analysts clearly believe Cogent Communications is more favorable than IDT.

Institutional & Insider Ownership

95.5% of Cogent Communications shares are held by institutional investors. Comparatively, 52.8% of IDT shares are held by institutional investors. 9.5% of Cogent Communications shares are held by insiders. Comparatively, 21.8% of IDT shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Cogent Communications beats IDT on 8 of the 15 factors compared between the two stocks.

About Cogent Communications

Cogent Communications Holdings, Inc. is a facilities-based provider of Internet access and Internet Protocol (IP), communications services. The Company’s network is specifically designed and optimized to transmit data using IP. The Company delivers its services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in North America, Europe and in Japan. The Company offers on-net services in over 175 metropolitan markets. The Company serves 1,990 on-net buildings. The Company’s on-net service in North America is its Fast Ethernet service, which provides Internet access at 100 megabits per second. It also offers Internet access services at higher speeds of up to ten Gigabits per second. These services are generally used by customers that have businesses, such as Web hosting, that are Internet-based.

About IDT

IDT Corporation is a holding company with operations primarily in the telecommunications and payment industries. The Company’s segments include Telecom Platform Services, Consumer Phone Services and All Other. The Company’s Telecom Platform Services segment provides retail telecommunications and payment offerings, as well as wholesale international long distance traffic termination. The Telecom Platform Services segment markets and distributes multiple communications and payment services across four businesses: Retail Communications, Wholesale Carrier Services, Payment Services and Hosted Platform Solutions. The Company’s Consumer Phone Services segment provides consumer local and long distance services in certain states of the United States. The Telecom Platform Services and Consumer Phone Services segments comprise the Company’s IDT Telecom division. The All Other segment includes its real estate holdings and other smaller businesses.

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