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Cogent (CCOI) Misses Earnings & Revenue Estimates in Q2

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Zacks Equity Research
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Cogent Communications Holdings, Inc. CCOI reported unimpressive second-quarter 2020 results, with the top and the bottom line missing the respective Zacks Consensus Estimate.

Net Income

Net income in the June-end quarter was $8.6 million or 18 cents per share compared with $7.1 million or 16 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 5 cents.

Cogent Communications Holdings, Inc. Price, Consensus and EPS Surprise

Cogent Communications Holdings, Inc. Price, Consensus and EPS Surprise
Cogent Communications Holdings, Inc. Price, Consensus and EPS Surprise

Cogent Communications Holdings, Inc. price-consensus-eps-surprise-chart | Cogent Communications Holdings, Inc. Quote

Revenues

Quarterly service revenues increased 4.6% year over year to $141 million. On a constant-currency basis, revenues increased 5.1% year over year. However, the top line lagged the consensus estimate of $143 million.

On-net revenues increased to $103.8 million from $97.5 million in the year-ago quarter. On-net service is provided to customers located in buildings that are physically connected to Cogent’s network by its facilities. The number of on-net buildings increased by 117 year over year to 2,854 as of Jun 30.

Off-net revenues slipped to $37 million from $37.2 million in the year-ago quarter. Off-net customers are located in buildings directly connected to the company’s network using other carriers’ facilities.

Other Details

Total operating expenses were $113.6 million compared with $113 million in the prior-year quarter. Operating income was $27.6 million compared with $22 million in the year-ago quarter. Adjusted EBITDA totaled $53.6 million compared with $47.3 million in the year-ago quarter for a margin of 38% and 35.1%, respectively.

Despite the COVID-19 pandemic, Cogent increased its dividend for the 32nd consecutive quarter. It hiked dividend by 2.5 cents per share to 70.5 cents for third-quarter 2020. The amount is payable on Sep 4 to shareholders on record as of Aug 21.

Cash Flow & Liquidity

In the first half of 2020, Cogent generated $69.8 million of net cash from operating activities compared with $69.3 million in the year-ago period. As of Jun 30, the company had $417 million in cash and cash equivalents with $189 million of finance lease obligations.

Zacks Rank & Other Stocks to Consider

Cogent carries a Zacks Rank #2 (Buy), at present.

Some other top-ranked stocks in the broader industry are Turtle Beach Corporation HEAR, Plantronics, Inc. PLT and Clearfield, Inc. CLFD, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Turtle Beach has a trailing four-quarter earnings surprise of 46.4%, on average.

Plantronics has a trailing four-quarter positive earnings surprise of 540%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.

Clearfield has a trailing four-quarter positive earnings surprise of 45.6%, on average. The company’s earnings topped the consensus estimate in two of the last four quarters.

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