Today's Dead Cat Bounce Stock Is Cogent Communications Holdings (CCOI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Cogent Communications Holdings ( CCOI) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cogent Communications Holdings as such a stock due to the following factors:

  • CCOI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.5 million.
  • CCOI has traded 291,970 shares today.
  • CCOI is up 4.6% today.
  • CCOI was down 10.8% yesterday.

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More details on CCOI:

Cogent Communications Holdings, Inc., through its subsidiaries, provides high-speed Internet access and Internet protocol communications service. The stock currently has a dividend yield of 3.6%. CCOI has a PE ratio of 1773.5. Currently there are 8 analysts that rate Cogent Communications Holdings a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for Cogent Communications Holdings has been 391,200 shares per day over the past 30 days. Cogent has a market cap of $1.6 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.60 and a short float of 7.4% with 4.82 days to cover. Shares are up 0.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cogent Communications Holdings as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.7%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for COGENT COMMUNICATIONS HLDGS is rather high; currently it is at 57.58%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.36% is in-line with the industry average.
  • COGENT COMMUNICATIONS HLDGS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, COGENT COMMUNICATIONS HLDGS reported lower earnings of $0.02 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus $0.02).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Telecommunication Services industry. The net income has significantly decreased by 100.7% when compared to the same quarter one year ago, falling from $52.60 million to -$0.35 million.
  • Net operating cash flow has decreased to $17.94 million or 38.74% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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