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Cogent (CCOI) Q4 Earnings Beat Estimates on Top-Line Growth

Cogent Communications Holdings, Inc. CCOI reported relatively healthy fourth-quarter 2021 results, wherein the bottom line surpassed the Zacks Consensus Estimate, but the top line missed the same. Top-line expansion on the back of higher on-net revenues and accretive customer connections drove Cogent’s quarterly performance.

Bottom Line

Net income in the December quarter was $18.5 million or 39 cents per share against a net loss of $6.6 million or a loss of 14 cents per share in the prior-year quarter. The year-over-year improvement was primarily driven by unrealized foreign exchange gain on 2024 euro notes in the reported quarter. Adjusted net income in the quarter was 24 cents per share, which beat the Zacks Consensus Estimate by 4 cents.

In 2021, Cogent recorded GAAP net income of $48.2 million or $1.03 per share compared with $6.2 million or 13 cents per share in 2020.

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


Quarterly service revenues increased to $147.2 million from $143.9 million in the year-ago quarter, driven by higher on-net revenues. The top line, however, missed the consensus estimate of $149 million. In 2021, total revenues were $589.8 million compared with $568.1 million in 2020.

On-net revenues in the reported quarter grew 3.4% year over year to $110.7 million, reflecting an increase in on-net customer connections. On-net service is provided to customers located in buildings physically connected to Cogent’s network by its facilities.

Off-net revenues declined 1% to $36.3 million. Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ facilities.

Other Details

GAAP gross profit was $68.2 million, up from $66.6 million for margins of 46.3% each. Total operating expenses were $118.4 million compared with $116.5 million in the prior-year quarter. Operating income was $36.2 million, up from $27.4 million. EBITDA totaled $57.4 million compared with $55.7 million in the year-ago quarter for respective margins of 39% and 38.7%. Total customer connections grew 4.6% to 93,726 on Dec 31, 2021.

Cogent increased its dividend for the 38th consecutive quarter. It increased its quarterly dividend by 2.5 cents per share to 85.5 cents for the first quarter of 2022.

Cash Flow & Liquidity

In 2021, Cogent generated $170.3 million of net cash from operating activities compared with $140.3 million in 2020. As of Dec 31, 2021, the company had $319.6 million in cash and cash equivalents with $17 million of finance lease obligations compared with respective tallies of $371.3 million and $15.7 million in the prior-year period.

Zacks Rank & Stocks to Consider

Cogent currently has a Zacks Rank #4 (Sell).

ADTRAN Inc. ADTN, sporting a Zacks Rank #1 (Strong Buy) is a solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

ADTRAN delivered an earnings surprise of 140.4%, on average, in the trailing four quarters. The company’s end-to-end solutions simplify the deployment of fiber-based broadband services and provide a better customer experience. ADTRAN is focused on being a top global supplier of access infrastructure and related value-added solutions from the Cloud Edge to the Subscriber Edge through a broad portfolio of flexible hardware and software network solutions. Over the past year, it has gained a modest 14.7%.

CommScope Holding Company, Inc. COMM, carrying a Zacks Rank #2 (Buy), is another key pick. It has a long-term earnings growth expectation of 21.6% and delivered an earnings surprise of 10.3%, on average, in the trailing four quarters.

CommScope is focused on sound technology, a highly efficient supply chain and commitment to continuous improvement. This will potentially make it a preferred partner for all carriers as the entire industry moves toward 5G. With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, CommScope is dedicatedly developing solutions to support wireline and wireless network convergence.

Knowles Corporation KN sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since February 2021.

The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.

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