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Cogent (CCOI) Q4 Earnings Beat Estimates, Revenues Rise Y/Y

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Zacks Equity Research
·3 min read
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Cogent Communications Holdings, Inc. CCOI reported decent fourth-quarter 2020 results, wherein the bottom line beat the Zacks Consensus Estimate.

This Washington, DC-based company’s share price fell 4.4% on Feb 25, closing the trading session at $59.47.

Bottom Line

Net loss in the December quarter was $6.6 million or loss of 14 cents per share against net income of $7.5 million or 16 cents per share in the prior-year quarter. The deterioration was the result of lower operating income, higher interest expense and foreign exchange losses of $19.2 million on Cogent’s 2024 euro notes.

In 2020, net income was $6.2 million or 13 cents per share compared with $37.5 million or 81 cents per share in 2019.

Quarterly adjusted earnings came in at 19 cents per share, which beat the Zacks Consensus Estimate by a penny.

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

Top Line

Quarterly service revenues increased 2.6% year over year to $143.9 million, primarily driven by higher on-net revenues. The top line matched the consensus estimate.

On-net revenues grew 4.3% year over year to $107.1 million, driven by growth in on-net customer connections. 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 113 from Dec 31, 2019 to 2,914 as of Dec 31, 2020.

Off-net revenues declined 2.2% to $36.7 million. Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ facilities.

In 2020, service revenues increased 4% year over year to $568.1 million.

Other Quarterly Details

Total operating expenses were $116.5 million compared with $112.5 million in the prior-year quarter. Operating income was $27.4 million, down from $28 million. EBITDA totaled $55.7 million compared with $52.7 million in the year-ago quarter with respective margins being 38.7% and 37.6%.

Total customer connections grew 3.5% from Dec 31, 2019 to 89,600 as of Dec 31, 2020.

Cogent increased its dividend for the 34th consecutive quarter. It increased its quarterly dividend by 2.5 cents per share to 75.5 cents for the first quarter of 2021. The amount is payable on Mar 26 to shareholders on record as of Mar 12.

Cash Flow & Liquidity

In 2020, Cogent generated $140.3 million of net cash from operations compared with $148.8 million in 2019.

As of Dec 31, 2020, the company had $371.3 million in cash and cash equivalents with $111.3 million of operating lease liabilities compared with a respective $399.4 million and $86.7 million a year ago.

Zacks Rank & Stocks to Consider

Cogent currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry are Aviat Networks AVNW, Plantronics PLT and Ubiquiti UI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aviat Networks delivered a trailing four-quarter earnings surprise of 61.7%, on average.

Plantronics delivered a trailing four-quarter earnings surprise of 560.4%, on average.

Ubiquiti delivered a trailing four-quarter earnings surprise of 37.1%, on average.

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