May 23, 2024
Top 10 Stock Cogent Communications Sell 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 May 23, 2024 in the market index D.J. US Telecom because of its high performance in at least one of the Obermatt investment strategies. All consolidated Obermatt Ranks are below-average. Based on the Obermatt Method, an investment in the company is not advisable today. Based on the Obermatt 360° View of 1 (1% performer), Obermatt issues an overall sell recommendation for Cogent Communications on May 23, 2024.
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 Sell
| 360 METRICS | May 23, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 33 |
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| SAFETY | ||||||||
| SAFETY | 15 |
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| SENTIMENT | ||||||||
| SENTIMENT | 8 |
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| 360° VIEW | ||||||||
| 360° VIEW | 1 |
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ANALYSIS: With an Obermatt 360° View of 1 (better than 1% compared with alternatives), overall professional sentiment and financial characteristics for the stock Cogent Communications are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with all four indicators below average for Cogent Communications. The consolidated Value Rank has a low rank of 49 which means that the share price of Cogent Communications is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 51% of alternative stocks in the same industry. The consolidated Growth Rank also has a low rank of 33, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is lower than for 33% of competitors in the same industry. The consolidated Safety Rank has a riskier rank of 15, which means that the company has a riskier financing structure than 85% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a low rank of 8, which means that professional investors are more pessimistic about the stock than for 92% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 1, Cogent Communications is worse than 99% of all alternative stock investment opportunities based on the Obermatt Method. This means that Cogent Communications shares are on the riskier side for investors. As all consolidated Obermatt Ranks are below-average, this is a risky stock investment proposition, especially since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 8. The negative market view on Cogent Communications may stem from the high stock price (low value), the low level of growth, or the risky financing structures. That's several problems with no good news anywhere. Based on the current information, we don’t see any compelling arguments to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not confirmed by investor behavior today. While Cogent Communications may have a bright future, it is reflected in neither the financial indicators nor the market sentiment. ...read more
Sentiment Strategy: Professional Market Sentiment for Cogent Communications negative
ANALYSIS: With an Obermatt Sentiment Rank of 8 (better than 8% compared with alternatives), overall professional sentiment and engagement for the stock Cogent Communications is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Cogent Communications. Analyst Opinions are at a rank of 55 (better than 55% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 21, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Cogent Communications. The Professional Investors rank is also low at 12, meaning that professional investors hold less stock in this company than in 88% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 5, which means that the current professional news and professional social networks are critical of this company (more negative news than for 95% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 8 (less encouraging than 92% compared with investment alternatives), Cogent Communications has a reputation among professional investors that is far below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Cogent Communications Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 49 (worse than 51% compared with alternatives), Cogent Communications shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Cogent Communications. Price-to-Profit (also referred to as price-earnings, P/E) is 100 which means that the stock price compared with what market professionals expect for future profits is lower than for 100% of comparable companies, indicating a good value concerning Cogent Communications's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 1, which means that the stock price is lower as regards to invested capital than for 1% of comparable investments. On the other hand, Price-to-Sales is less favorable than 85% of alternatives (only 15% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 6% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 49, is a hold recommendation based on Cogent Communications's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Cogent Communications Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 33 (better than 33% compared with alternatives), Cogent Communications shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below-average for Cogent Communications. While Sales Growth ranks at 54, professionals currently expect the company to grow more than 54% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 8, which means that, currently, professionals expect the company to grow its profits less than 92% of its competitors, and Capital Growth has a low rank of 47. Historic stock returns were also below average with a current Stock Returns rank of 48 which means that the stock returns have recently been below 52% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 33, is a hold recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. ...read more
Safety Strategy: Cogent Communications Debt Financing Safety risky
| SAFETY METRICS | May 23, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 16 |
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| REFINANCING | ||||||||
| REFINANCING | 64 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 4 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 15 |
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ANALYSIS: With an Obermatt Safety Rank of 15 (better than 15% 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 64, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 64% of its competitors. But Leverage is high with a rank of 16, meaning the company has an above-average debt-to-equity ratio. It has more debt than 84% of its competitors. Liquidity is also on the riskier side with a rank of 4, meaning the company generates less profit to service its debt than 96% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 15 (worse than 85% 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 Lowest Financial Performance
| COMBINED PERFORMANCE | May 23, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 49 |
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| GROWTH | ||||||||
| GROWTH | 33 |
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| SAFETY | ||||||||
| SAFETY | 4 |
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| COMBINED | ||||||||
| COMBINED | 11 |
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ANALYSIS: With an Obermatt Combined Rank of 11 (worse than 89% compared with investment alternatives), Cogent Communications (Alternative Carriers, USA) shares have lower financial characteristics compared with similar stocks. Shares of Cogent Communications are low in value (priced high) with a consolidated Value Rank of 49 (worse than 51% of alternatives), show below-average growth (Growth Rank of 33), and are riskily financed (Safety Rank of 15), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 11, is a sell recommendation based on Cogent Communications's financial characteristics. As the company Cogent Communications's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 49), low growth (Obermatt Growth Rank of 33), and risky financing practices (Obermatt Safety Rank of 15), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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