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Cogeco Communications (TSE:CCA)
:CCA
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Cogeco Communications
(OTC:CCA)
77Outperform
Positive Factors
Revenue Stabilization
Cogeco is initiating price increases in the U.S. in February (internet/video) and in Canada in March (internet only), which should support revenue stabilization starting in Q3.
Transformation Program
Cogeco is focused on its three-year transformation program centered around efficiencies, digitization, analytics, network expansions, and cross-selling wireless.
Negative Factors
ARPU Pressure
Management highlighted ARPU pressure in Canada, likely to push revenue trends into low single-digit decline territory.
EBITDA Growth
EBITDA growth is expected to slow in Q2.
Cogeco Communications (CCA) vs. S&P 500 (SPY)
Market Cap
C$2.97B
Dividend Yield5.38%
Average Volume (3M)115.37K
Price to Earnings (P/E)8.5
Beta (1Y)0.55
Revenue Growth-0.07%
EPS Growth-1.48%
CountryCA
Employees4,700
SectorCommunication Services
Sector Strength74
IndustryTelecommunications Services
Share Statistics
EPS (TTM)8.22
Shares Outstanding30,272,425
10 Day Avg. Volume193,879
30 Day Avg. Volume115,368
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.95
Price to Cash Flow (P/CF)2.20
P/FCF Ratio3.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$76.86Price Target Upside9.52% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Cogeco Communications Business Overview & Revenue Model
Company DescriptionCogeco Communications Inc. (CCA) is a leading telecommunications and media company operating primarily in North America. The company provides a wide range of services including cable television, internet, and telephony services to residential and business customers. Cogeco Communications operates through its subsidiaries, Cogeco Connexion in Canada and Atlantic Broadband in the United States, focusing on delivering high-quality connectivity and entertainment solutions.
How the Company Makes MoneyCogeco Communications generates revenue primarily through its subscription-based services in the cable and telecommunications sectors. The company earns money by providing cable television, internet access, and phone services to both residential and business customers, with a significant portion of revenue coming from monthly subscription fees. Additionally, Cogeco Communications may engage in strategic partnerships and offer bundled service packages, which can enhance customer retention and increase average revenue per user (ARPU). The company's earnings are also influenced by its investments in network infrastructure and technology to improve service offerings and expand its customer base.
Cogeco Communications Financial Statement Overview
Summary
Cogeco Communications displays a solid financial foundation with strong cash flow generation and operational efficiency. The company has a stable income statement with decent profitability, although revenue growth has been flat. The balance sheet shows moderate leverage, and cash flow is robust, indicating efficient cash management.Income Statement
Cogeco Communications has demonstrated a stable financial performance. The TTM Gross Profit Margin is strong at approximately 65.5%, indicating efficient cost management. The Net Profit Margin is moderate at 11.7%, suggesting a decent level of profitability. Revenue growth has been relatively stagnant, with a slight decline observed in recent periods. The EBIT and EBITDA margins are robust at 24.9% and 48.4%, respectively, showcasing strong operational efficiency.75
Positive
Balance Sheet
The Balance Sheet reflects a solid equity position with a Debt-to-Equity ratio of approximately 1.59, indicating moderate leverage. The Return on Equity (ROE) stands at 11.2%, reflecting moderate profitability for equity holders. The Equity Ratio is 31.3%, highlighting a balanced capital structure, though there is room for improvement in reducing leverage.70
Positive
Cash Flow
The Cash Flow statement is strong, with a solid Operating Cash Flow to Net Income ratio of 3.34, indicating efficient cash generation relative to net income. The Free Cash Flow to Net Income ratio is 1.32, showing good cash flow after capital expenditures. The Free Cash Flow Growth Rate is healthy at 80.7% over the past year, indicating strong cash flow growth.80
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.97B | 2.98B | 2.98B | 2.90B | 2.51B | 2.38B | Gross Profit |
| 1.94B | 2.49B | 932.42M | 2.11B | 1.63B | 1.55B | EBIT |
| 738.76M | 768.76M | 810.04M | 770.32M | 697.37M | 653.54M | EBITDA |
| 1.44B | 1.36B | 1.39B | 1.36B | 1.20B | 1.17B | Net Income Common Stockholders |
| 346.63M | 335.53M | 392.27M | 423.30M | 401.52M | 375.17M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 11.61M | 76.33M | 362.92M | 370.90M | 365.52M | 366.50M | Total Assets |
| 2.62B | 9.68B | 9.77B | 9.28B | 7.35B | 6.80B | Total Debt |
| 1.05B | 4.82B | 5.04B | 4.68B | 3.28B | 3.12B | Net Debt |
| 1.04B | 4.75B | 4.68B | 4.31B | 2.91B | 2.76B | Total Liabilities |
| 1.54B | 6.20B | 6.33B | 6.09B | 4.55B | 4.16B | Stockholders Equity |
| 1.08B | 2.98B | 2.96B | 2.75B | 2.42B | 2.27B |
| Cash Flow | Free Cash Flow | ||||
| 456.74M | 516.13M | 100.08M | 259.55M | 426.86M | 433.83M | Operating Cash Flow |
| 1.16B | 1.18B | 962.90M | 1.24B | 1.02B | 917.82M | Investing Cash Flow |
| -900.46M | -916.61M | -954.47M | -2.41B | -984.83M | -557.27M | Financing Cash Flow |
| -250.06M | -542.37M | -23.77M | 981.92M | -27.41M | -547.10M |
Cogeco Communications Technical Analysis
Positive
70.18
Price Trends
65.03
Positive
66.26
Positive
63.96
Positive
Market Momentum
0.92
Negative
66.66
Neutral
78.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CCA, the sentiment is Positive. The current price of 70.18 is above the 20-day moving average (MA) of 67.36, above the 50-day MA of 65.03, and above the 200-day MA of 63.96, indicating a bullish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 66.66 is Neutral, neither overbought nor oversold. The STOCH value of 78.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CCA.
Cogeco Communications Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $8.50B | 11.25 | 38.85% | 3.76% | 3.76% | 14.27% | |
77 Outperform | C$2.97B | 8.54 | 11.48% | 5.38% | -0.07% | -1.48% | |
75 Outperform | $21.16B | 11.83 | 16.66% | 5.46% | 6.71% | 96.70% | |
67 Neutral | $31.25B | 30.93 | 6.26% | 7.92% | 0.67% | 15.00% | |
61 Neutral | $30.45B | 184.83 | 1.80% | 12.69% | -1.07% | -92.15% | |
59 Neutral | $27.83B | 1.88 | -18.16% | 4.00% | 2.13% | -44.45% |
* Communication Services Sector Average
Performance Comparison
TSE:CCA
Cogeco Communications
69.50
15.52
28.76%
TSE:T
Telus
20.58
0.40
1.99%
TSE:BCE
BCE
32.63
-7.81
-19.32%
TSE:QBR.B
Quebecor
36.80
9.26
33.63%
TSE:RCI.B
Rogers Communication
36.17
-15.24
-29.64%
Cogeco Communications Earnings Call Summary
Earnings Call Date: Jan 13, 2025 | % Change Since: 5.65% | Next Earnings Date: Apr 9, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed outlook. While the company reported strong growth in Internet subscribers and improvements in EBITDA margins, challenges such as revenue decline in the U.S., a tough advertising market, and anticipated decreases in Q2 revenue and EBITDA indicate some headwinds.Highlights
Strong Internet Subscriber Growth in Canada
Cogeco Connexion in Canada experienced strong Internet subscriber growth, with the base expanding by 10,700 subscribers under both the Cogeco and oxio brands.
Successful U.S. Market Expansion
In Ohio, Cogeco had its best quarter since acquiring the business, showing improvement in subscriber metrics and customer satisfaction.
EBITDA Margin Expansion
Transformation efforts contributed to an expansion of EBITDA margins, supported by efficiency improvements and higher-margin service offerings.
Increased Free Cash Flow
Free cash flow in constant currency increased by 7.8%, largely due to proceeds from a sale and leaseback transaction and higher adjusted EBITDA.
Improved Diluted Earnings Per Share
Diluted earnings per share increased by 18.4% due to lower financial expenses, higher adjusted EBITDA, and fewer shares outstanding.
Lowlights
Revenue Decline in the U.S.
Breezeline's revenue declined by 3.4% in constant currency, primarily due to a cumulative decline in the subscriber base and video cord cutting.
Challenging Radio Advertising Market
Cogeco Media experienced ongoing challenges in the radio advertising market, contributing to lower-than-anticipated revenue.
Expected Decrease in Q2 Revenue and EBITDA
For Q2, Cogeco expects consolidated revenue and adjusted EBITDA in constant currency to decrease in the low single digits due to competitive pressures and investments.
Company Guidance
During the Q1 2025 earnings call, Cogeco Inc. and Cogeco Communications Inc. provided guidance that maintained their annual financial outlook despite a 1.6% decline in consolidated revenue and a 1.4% increase in EBITDA. The company expects Q2 consolidated revenue and adjusted EBITDA in constant currency to decrease in the low single digits due to competitive pressures and business investments. Capital intensity is anticipated to be approximately 200 basis points higher than Q2 of last year. In Canada, Q2 revenue is projected to decrease in the low-single-digits with adjusted EBITDA to decrease in the mid-single digits, reflecting lower revenue and increased costs. In the U.S., Breezeline is expected to see a mid-single-digit decrease in revenue and a low-single-digit decrease in adjusted EBITDA. Despite these challenges, the company continues to focus on its transformation program, targeting a net debt-to-EBITDA ratio in the low three turns range over time.Cogeco Communications Corporate Events
Private Placements and Financing
Cogeco Communications Unveils $325 Million Notes Offering
Neutral
Feb 5, 2025
Cogeco Communications Inc. has announced a private offering of $325 million in senior secured notes due in 2035, with an interest rate of 4.743%. The proceeds from this offering will be used to repay existing debt and for general corporate purposes, aiming to maintain the company’s financial flexibility. The notes are rated ‘BBB (low)’ by DBRS Limited with a stable outlook and are expected to be rated ‘BBB-‘ by Standard & Poor’s. This move reflects Cogeco’s strategic financial management and positions it to further solidify its market presence.
Cogeco Communications Reports Strong Q1 2025 Results and Plans for Canadian Wireless Launch
Jan 13, 2025
Cogeco Communications reported strong financial results for the first quarter of fiscal 2025, with a notable increase in Internet subscribers in Canada and improved performance in the U.S. The company has embarked on a three-year transformation program aimed at enhancing agility and competitiveness, with plans to launch wireless services in Canada soon. Key financial indicators, including adjusted EBITDA and profit, have shown growth, and the company declared an increased quarterly dividend, reflecting its robust financial health.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.