TSC Ratings' Updates: Cogent

The following ratings changes were generated on Wednesday, Dec. 10.

We've upgraded Cogent(COGT Quote), which provides automated fingerprint identification systems and other fingerprint biometrics solutions, from hold to buy, driven by its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Revenue rose by a very impressive 55.6% since the same quarter last year, outperforming the industry growth rate of 20.6% and boosting EPS. Cogent has no debt to speak of, resulting in a debt-to-equity ratio of zero, a relatively favorable sign. The company also maintains a quick ratio of 4.70, clearly demonstrating the ability to cover short-term cash needs. Cogent's gross profit margin of 73.2% is very high, having increased significantly from the same period last year. Also, its 34.4% net profit margin significantly outperformed the industry. ...