Comparing Verizon Communications (NYSE:VZ) and Cogent Communications (NASDAQ:CCOI)

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

Analyst Ratings

This is a summary of current recommendations and price targets for Verizon Communications and Cogent Communications, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Verizon Communications	0	12	6	3	2.57
Cogent Communications	2	3	2	0	2.00

Verizon Communications currently has a consensus target price of $47.41, indicating a potential upside of 17.66%. Cogent Communications has a consensus target price of $46.60, indicating a potential upside of 5.55%. Given Verizon Communications’ stronger consensus rating and higher possible upside, analysts plainly believe Verizon Communications is more favorable than Cogent Communications.

Earnings & Valuation

This table compares Verizon Communications and Cogent Communications”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Verizon Communications	$137.00 billion	1.24	$17.51 billion	$4.29	9.39
Cogent Communications	$1.04 billion	2.10	-$204.07 million	($4.54)	-9.72

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Verizon Communications	13.28%	19.61%	5.19%
Cogent Communications	-21.57%	-117.56%	-6.78%

Insider & Institutional Ownership

62.1% of Verizon Communications shares are held by institutional investors. Comparatively, 92.5% of Cogent Communications shares are held by institutional investors. 0.1% of Verizon Communications shares are held by company insiders. Comparatively, 10.2% of Cogent Communications shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Verizon Communications pays an annual dividend of $2.76 per share and has a dividend yield of 6.9%. Cogent Communications pays an annual dividend of $4.06 per share and has a dividend yield of 9.2%. Verizon Communications pays out 64.3% of its earnings in the form of a dividend. Cogent Communications pays out -89.4% 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. Verizon Communications has increased its dividend for 20 consecutive years and Cogent Communications has increased its dividend for 14 consecutive years. Cogent Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Verizon Communications has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, Cogent Communications has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Summary

Verizon Communications beats Cogent Communications on 12 of the 18 factors compared between the two stocks.

About Verizon Communications

Verizon Communications Inc., through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. It operates in two segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business). The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements; and fixed wireless access (FWA) broadband through its wireless networks, as well as related equipment and devices, such as smartphones, tablets, smart watches, and other wireless-enabled connected devices. The segment also offers wireline services in the Mid-Atlantic and Northeastern United States, as well as Washington D.C. through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network. The Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and conferencing, corporate networking, security and managed network, local and long-distance voice, and network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was incorporated in 1983 and is headquartered in New York, New York.

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.