Cogent Communications Holdings (NASDAQ: CCOI) and Towerstream (NASDAQ:TWER) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitabiliy, earnings and institutional ownership.

Institutional and Insider Ownership

94.5% of Cogent Communications Holdings shares are owned by institutional investors. Comparatively, 13.4% of Towerstream shares are owned by institutional investors. 9.5% of Cogent Communications Holdings shares are owned by insiders. Comparatively, 4.5% of Towerstream shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Cogent Communications Holdings pays an annual dividend of $1.76 per share and has a dividend yield of 4.0%. Towerstream does not pay a dividend. Cogent Communications Holdings pays out 502.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Cogent Communications Holdings has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Towerstream has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Cogent Communications Holdings 3.45% -33.66% 2.32%
Towerstream -58.02% N/A -46.48%

Valuation and Earnings

This table compares Cogent Communications Holdings and Towerstream’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cogent Communications Holdings $446.71 million 4.45 $138.82 million $0.35 127.29
Towerstream $26.73 million 0.06 -$1.17 million ($8.58) -0.01

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Cogent Communications Holdings and Towerstream, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cogent Communications Holdings 2 5 9 0 2.44
Towerstream 0 0 0 0 N/A

Cogent Communications Holdings presently has a consensus target price of $43.38, suggesting a potential downside of 2.62%. Given Cogent Communications Holdings’ higher probable upside, equities research analysts clearly believe Cogent Communications Holdings is more favorable than Towerstream.

Summary

Cogent Communications Holdings beats Towerstream on 11 of the 14 factors compared between the two stocks.

Cogent Communications Holdings Company Profile

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.

Towerstream Company Profile

Towerstream Corporation is a provider of fixed wireless services to businesses in over 10 urban markets across the United States. The Company operates through Fixed Wireless Services (Fixed Wireless) segment. Its fixed wireless service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. Towerstream installs equipment on the rooftops of the buildings in which the Fixed Wireless segment customers operate and refer to these as Customer Locations. This equipment includes receivers and antennas, and a wireless connection is established between the Customer Location to one or more of its points of presence (PoPs). It provides fixed wireless broadband services to commercial customers and delivers access over a Wireless network transmitting over both regulated and unregulated radio spectrum. It provides services to business customers in various locations, including New York City, Boston, Chicago and Houston.

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