Cogent Communications (NASDAQ: CCOI) and Telefonica Brasil (NYSE:VIV) are both mid-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, risk, dividends, analyst recommendations, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Cogent Communications and Telefonica Brasil, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cogent Communications 5 6 4 0 1.93
Telefonica Brasil 0 3 1 0 2.25

Cogent Communications presently has a consensus target price of $42.67, suggesting a potential downside of 3.80%. Telefonica Brasil has a consensus target price of $16.03, suggesting a potential upside of 7.39%. Given Telefonica Brasil’s stronger consensus rating and higher probable upside, analysts plainly believe Telefonica Brasil is more favorable than Cogent Communications.

Earnings and Valuation

This table compares Cogent Communications and Telefonica Brasil’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cogent Communications $446.90 million 4.56 $14.92 million $0.36 123.19
Telefonica Brasil $12.25 billion 2.06 $1.17 billion $0.80 18.66

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

Profitability

This table compares Cogent Communications and Telefonica Brasil’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cogent Communications 3.37% -23.86% 2.18%
Telefonica Brasil 10.00% 6.29% 4.23%

Risk and Volatility

Cogent Communications has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500.

Insider and Institutional Ownership

95.5% of Cogent Communications shares are held by institutional investors. Comparatively, 9.3% of Telefonica Brasil shares are held by institutional investors. 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.

Dividends

Cogent Communications pays an annual dividend of $1.92 per share and has a dividend yield of 4.3%. Telefonica Brasil pays an annual dividend of $0.82 per share and has a dividend yield of 5.5%. 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. Telefonica Brasil pays out 102.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefonica Brasil has raised its dividend for 4 consecutive years. Telefonica Brasil is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Telefonica Brasil beats Cogent Communications on 12 of the 17 factors compared between the two stocks.

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.

About Telefonica Brasil

Telefonica Brasil S.A. is a mobile telecommunications company in Brazil offering postpaid mobile services. The Company also operates as a fixed telecommunications company in the state of Sao Paulo. The Company markets its mobile services under its Vivo brand. It offers its clients a portfolio of products, including mobile and fixed voice, mobile data, fixed broadband, ultra-fast broadband, Pay television, information technology and digital services. Its operations consist of local and long distance fixed telephone services; mobile services, including value-added services; data services, including broadband services and mobile data services; Pay television services through direct to home (DTH), Internet protocol television (IPTV) and cable; network services, such as rental of facilities, as well as other services; wholesale services, including interconnection; digital services; services designed specifically for corporate customers, and the sale of wireless devices and accessories.

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