Pegasystems (NASDAQ:PEGA) and Cogent Communications (NASDAQ:CCOI) are both mid-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, risk, earnings, profitability, valuation, dividends and institutional ownership.
Volatility and Risk
Pegasystems has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Cogent Communications has a beta of 0.1, meaning that its share price is 90% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current ratings and target prices for Pegasystems and Cogent Communications, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Pegasystems | 0 | 1 | 13 | 0 | 2.93 |
| Cogent Communications | 0 | 3 | 3 | 0 | 2.50 |
Pegasystems presently has a consensus price target of $145.50, indicating a potential upside of 22.83%. Cogent Communications has a consensus price target of $79.7143, indicating a potential upside of 38.56%. Given Cogent Communications' higher probable upside, analysts plainly believe Cogent Communications is more favorable than Pegasystems.
Earnings & Valuation
This table compares Pegasystems and Cogent Communications' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Pegasystems | $911.38 million | 10.52 | $-90,430,000.00 | ($1.25) | -94.77 |
| Cogent Communications | $546.16 million | 4.97 | $37.52 million | $0.76 | 75.70 |
Cogent Communications has lower revenue, but higher earnings than Pegasystems. Pegasystems is trading at a lower price-to-earnings ratio than Cogent Communications, indicating that it is currently the more affordable of the two stocks.
Dividends
Pegasystems pays an annual dividend of $0.12 per share and has a dividend yield of 0.1%. Cogent Communications pays an annual dividend of $2.92 per share and has a dividend yield of 5.1%. Pegasystems pays out -9.6% of its earnings in the form of a dividend. Cogent Communications pays out 384.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pegasystems has increased its dividend for 1 consecutive years and Cogent Communications has increased its dividend for 7 consecutive years. Cogent Communications is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
47.9% of Pegasystems shares are held by institutional investors. Comparatively, 81.8% of Cogent Communications shares are held by institutional investors. 51.9% of Pegasystems shares are held by insiders. Comparatively, 10.7% of Cogent Communications shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Profitability
This table compares Pegasystems and Cogent Communications' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Pegasystems | -6.48% | -19.29% | -7.77% |
| Cogent Communications | 3.60% | -17.36% | 4.16% |
Summary
Cogent Communications beats Pegasystems on 10 of the 17 factors compared between the two stocks.
