Critical Analysis: Towerstream (TWER) versus Cogent Communications Holdings (CCOI)
Towerstream (NASDAQ: TWER) and Cogent Communications Holdings (NASDAQ:CCOI) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.
Volatility and Risk
Towerstream has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, Cogent Communications Holdings has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.
This table compares Towerstream and Cogent Communications Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cogent Communications Holdings||3.39%||-27.66%||2.24%|
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 488.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a summary of recent ratings and price targets for Towerstream and Cogent Communications Holdings, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cogent Communications Holdings||2||4||7||0||2.38|
Cogent Communications Holdings has a consensus price target of $42.45, indicating a potential downside of 2.40%. Given Cogent Communications Holdings’ higher probable upside, analysts plainly believe Cogent Communications Holdings is more favorable than Towerstream.
Institutional & Insider Ownership
13.4% of Towerstream shares are owned by institutional investors. Comparatively, 94.3% of Cogent Communications Holdings shares are owned by institutional investors. 4.5% of Towerstream shares are owned by company insiders. Comparatively, 9.5% of Cogent Communications Holdings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Towerstream and Cogent Communications Holdings’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Towerstream||$26.73 million||0.06||-$1.17 million||($8.58)||-0.01|
|Cogent Communications Holdings||$455.43 million||4.27||$143.43 million||$0.36||120.83|
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.
Cogent Communications Holdings beats Towerstream on 11 of the 14 factors compared between the two stocks.
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.
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.
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