Contrasting BCE (NYSE:BCE) and Cogent Communications (NASDAQ:CCOI)

Cogent Communications (NASDAQ:CCOI) and BCE (NYSE:BCE) are both communication services companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Insider and Institutional Ownership

92.4% of Cogent Communications shares are owned by institutional investors. Comparatively, 41.5% of BCE shares are owned by institutional investors. 4.2% of Cogent Communications shares are owned by insiders. Comparatively, 0.2% of BCE shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cogent Communications	$975.77 million	0.39	-$182.17 million	($0.96)	-7.80
BCE	$17.51 billion	1.08	$4.62 billion	$4.89	4.14

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cogent Communications	-4.73%	N/A	-4.86%
BCE	25.49%	12.90%	3.25%

Dividends

Cogent Communications pays an annual dividend of $0.08 per share and has a dividend yield of 1.1%. BCE pays an annual dividend of $1.26 per share and has a dividend yield of 6.2%. Cogent Communications pays out -8.3% of its earnings in the form of a dividend. BCE pays out 25.8% 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 increased its dividend for 14 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Cogent Communications and BCE, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cogent Communications	2	6	3	0	2.09
BCE	0	5	7	0	2.58

Cogent Communications presently has a consensus price target of $19.55, suggesting a potential upside of 161.01%. BCE has a consensus price target of $29.00, suggesting a potential upside of 43.25%. Given Cogent Communications’ higher probable upside, equities research analysts clearly believe Cogent Communications is more favorable than BCE.

Volatility and Risk

Cogent Communications has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, BCE has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Summary

BCE beats Cogent Communications on 11 of the 17 factors compared between the two stocks.

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.

About BCE

BCE Inc., a communications company, provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. The company operates through two segments, Bell Communication and Technology Services, and Bell Media. The Bell Communication and Technology Services segment provides wireless products and services including mobile data and voice plans and devices; wireline products and services comprising data, including internet access, internet protocol television, cloud-based services, and business solutions, as well as voice, and other communication services and products; and satellite TV and connectivity services for residential, small and medium-sized business, government, and large enterprise customers. This segment also buys and sells local telephone, long distance, and data and other services from or to resellers and other carriers; and operates consumer electronics retail stores. The Bell Media segment provides conventional TV, specialty TV, pay TV, streaming services, digital media services, radio broadcasting services, and out-of-home advertising services. BCE Inc. was founded in 1880 and is headquartered in Verdun, Canada.