Cogeco Communications Inc. operates as a communications corporation in North America. It operates in two segments, Canadian Broadband Services and American Broadband Services. The company offers Internet, video, and telephony services to residential and business customers through its two-way broadband fiber networks. It provides Internet services using modems, Wi-Fi gateways, and extenders either on a rental basis or as part of the Internet service package; video services on a subscription basis; home phone services using Internet protocol (IP); local and long-distance calling services; broadband Internet services; and IP based telephony services and other network connectivity services delivered over fiber optic connection to larger businesses. The company serves the primary service units, Internet, video, and telephony service customers. It offers cable operator services under the Cogeco Connexion name in Québec and Ontario, and in the United States under the Atlantic Broadband brand. The company was formerly known as Cogeco Cable Inc. and changed its name to Cogeco Communications Inc. in January 2016. Cogeco Communications Inc. was founded in 1972 and is headquartered in Montreal, Canada. Cogeco Communications Inc. operates as a subsidiary of Cogeco Inc.
Strategy: Beat the TSX
Return at exit: Live
Value Play With Growth Potential
• Cogeco Communications stands out as an undervalued gem with a remarkably low P/E ratio of 9.0 and price-to-book of just 0.85, trading below its book value despite solid financial performance.
• The company demonstrates impressive market momentum with a 13.8% 1-year return and positive 6-month (+8%) and 3-month (+5.9%) gains, while analyst fair value estimates suggest ~15% upside potential.
• Investors benefit from an attractive 6% dividend yield with consistent growth (7% increase in latest quarter), supported by strong EBITDA margins of 50.4%.
• The three-year transformation program is showing positive results despite revenue headwinds, with management highlighting significant growth opportunities in the U.S. market where penetration remains below 20% in half of its footprint.
• S&P’s outlook revision to stable and BMO’s recent price target increase to C$75 reflect growing confidence in Cogeco’s turnaround strategy and financial stability.