Comparing IDT (IDT) & Cogent Communications (CCOI)

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

Institutional & Insider Ownership

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

Volatility and Risk

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

Dividends

IDT pays an annual dividend of $0.76 per share and has a dividend yield of 6.8%. Cogent Communications pays an annual dividend of $1.92 per share and has a dividend yield of 4.3%. IDT pays out -115.2% of its earnings in the form of a dividend. Cogent Communications pays out 533.3% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and target prices for IDT and Cogent Communications, as reported by MarketBeat.com.

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

Cogent Communications has a consensus target price of $42.67, suggesting a potential downside of 4.76%. Given Cogent Communications’ higher probable upside, analysts clearly believe Cogent Communications is more favorable than IDT.

Profitability

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

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

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IDT $1.50 billion 0.18 $8.17 million ($0.66) -16.89
Cogent Communications $446.90 million 4.61 $14.92 million $0.36 124.44

Cogent Communications has lower revenue, but higher earnings 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.

Summary

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

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.

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.

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