Financial Comparison: AT&T (NYSE:T) & Cogent Communications (NASDAQ:CCOI)

AT&T (NYSE:T) and Cogent Communications (NASDAQ:CCOI) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.

Risk & Volatility

AT&T has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500. Comparatively, Cogent Communications has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.

Dividends

AT&T pays an annual dividend of $1.11 per share and has a dividend yield of 4.1%. Cogent Communications pays an annual dividend of $4.04 per share and has a dividend yield of 8.1%. AT&T pays out 68.1% of its earnings in the form of a dividend. Cogent Communications pays out -100.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cogent Communications has raised its dividend for 14 consecutive years. Cogent Communications is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for AT&T and Cogent Communications, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AT&T	1	6	17	1	2.72
Cogent Communications	1	2	5	0	2.50

AT&T presently has a consensus target price of $29.17, suggesting a potential upside of 8.35%. Cogent Communications has a consensus target price of $75.75, suggesting a potential upside of 51.50%. Given Cogent Communications’ higher probable upside, analysts clearly believe Cogent Communications is more favorable than AT&T.

Valuation and Earnings

This table compares AT&T and Cogent Communications”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AT&T	$122.34 billion	1.58	$10.95 billion	$1.63	16.52
Cogent Communications	$1.04 billion	2.38	-$204.07 million	($4.01)	-12.47

AT&T has higher revenue and earnings than Cogent Communications. Cogent Communications is trading at a lower price-to-earnings ratio than AT&T, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AT&T and Cogent Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AT&T	9.64%	13.63%	4.08%
Cogent Communications	-18.76%	-70.29%	-6.05%

Insider and Institutional Ownership

57.1% of AT&T shares are held by institutional investors. Comparatively, 92.5% of Cogent Communications shares are held by institutional investors. 0.1% of AT&T shares are held by insiders. Comparatively, 11.4% 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.

Summary

AT&T beats Cogent Communications on 10 of the 18 factors compared between the two stocks.

About AT&T

AT&T, Inc. is a holding company, which engages in the provision of telecommunications and technology services. It operates through the Communications and Latin America segments. The Communications segment offers wireless, wireline telecom, and broadband services to businesses and consumers located in the US and businesses globally. The Latin America segment provides wireless services and equipment in Mexico. The company was founded in 1983 and is headquartered in Dallas, TX.

About Cogent Communications

Cogent Communications Holdings, Inc., through its subsidiaries, provides high-speed Internet access, private network, and data center colocation space services in North America, Europe, Oceania, South America, and Africa. The company offers on-net Internet access and private network services to law firms, financial services firms, and advertising and marketing firms, as well as heath care providers, educational institutions and other professional services businesses, other Internet service providers, telephone companies, cable television companies, web hosting companies, media service providers, mobile phone operators, content delivery network companies, and commercial content and application service providers. It also provides Internet access and private network services to customers that are not located in buildings directly connected to its network; and on-net services to customers located in buildings that are physically connected to its network. In addition, the company offers off-net services to corporate customers using other carriers' circuits to provide the last mile portion of the link from the customers' premises to the network. Further, it operates data centers that allow its customers to collocate their equipment and access the network. It serves primarily to small and medium-sized businesses, communications service providers, and other bandwidth-intensive organizations. Cogent Communications Holdings, Inc. was founded in 1999 and is headquartered in Washington, the District of Columbia.