Reviewing Cogent Communications (NASDAQ:CCOI) & MicroStrategy (NASDAQ:MSTR)

Cogent Communications (NASDAQ:CCOI) and MicroStrategy (NASDAQ:MSTR) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Cogent Communications and MicroStrategy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cogent Communications 1 4 3 0 2.25
MicroStrategy 0 1 0 0 2.00

Cogent Communications presently has a consensus target price of $82.00, suggesting a potential upside of 3.71%. MicroStrategy has a consensus target price of $135.00, suggesting a potential upside of 16.59%. Given MicroStrategy’s higher probable upside, analysts clearly believe MicroStrategy is more favorable than Cogent Communications.

Valuation & Earnings

This table compares Cogent Communications and MicroStrategy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cogent Communications $546.16 million 6.83 $37.52 million $0.76 104.04
MicroStrategy $486.33 million 2.41 $34.35 million $1.22 94.91

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

Risk and Volatility

Cogent Communications has a beta of 0.23, meaning that its stock price is 77% less volatile than the S&P 500. Comparatively, MicroStrategy has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500.

Insider & Institutional Ownership

85.8% of Cogent Communications shares are held by institutional investors. Comparatively, 70.0% of MicroStrategy shares are held by institutional investors. 10.7% of Cogent Communications shares are held by company insiders. Comparatively, 26.9% of MicroStrategy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Cogent Communications 6.79% -20.95% 4.46%
MicroStrategy 8.90% 4.25% 2.38%

Summary

Cogent Communications beats MicroStrategy on 8 of the 14 factors compared between the two stocks.

Cogent Communications Company Profile

Cogent Communications Holdings, Inc., through its subsidiaries, provides high-speed Internet access, private network, and data center colocation space services primarily to small and medium-sized businesses, communications service providers, and other bandwidth-intensive organizations in North America, Europe, Asia, Australia, and Brazil. The company offers on-net Internet access and private network services to law firms, financial services firms, advertising and marketing firms, other professional services businesses, other Internet service providers, telephone companies, cable television companies, Web hosting companies, content delivery network companies, and commercial content and application service providers. It also provides on-net services in carrier-neutral data centers, Cogent controlled data centers, and single-tenant office buildings. In addition, the company offers off-net services to businesses that are connected to its network primarily by means of ‘last mile’ access service lines obtained from other carriers primarily in the form of metropolitan Ethernet circuits. Further, it provides Internet connectivity to customers that are not located in buildings directly connected to its network, as well as offers voice services. The company operates 52 data centers. Cogent Communications Holdings, Inc. was founded in 1999 and is headquartered in Washington, the District of Columbia.

MicroStrategy Company Profile

MicroStrategy Incorporated provides enterprise analytics and mobility software platforms worldwide. It offers MicroStrategy Consulting that provides customers with assessment, advisory, architecture, and deployment services to guide their customers in defining, developing, and delivering business analytics solutions for their enterprises across various industries; and MicroStrategy Education, which consists of classroom-based courses, instructor-led courses, recorded courses, self-paced e-learning modules, customer on-site training, and enterprise E-Courseware options for large organizations in various languages. The company's products also include MicroStrategy's software, such as technical support services for customers, business partners, and prospects; and software maintenance and renewal contract services, as well as educational programs and other support services. MicroStrategy Incorporated provides its services through enterprise sales force and channel partners. It serves companies from a range of industries, including retail, consulting, technology, manufacturing, finance, banking, insurance, healthcare, education, and telecommunications, as well as the public sector. The company was founded in 1989 and is headquartered in Tysons Corner, Virginia.

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