Is Cogent Communications Holdings, Inc. overvalued or undervalued?

As of 27 February 2025, the valuation grade for Cogent Communications Holdings, Inc. has moved from expensive to risky, indicating a deterioration in its valuation outlook. The company appears to be overvalued, particularly given its negative P/E ratio and poor return metrics. Key ratios include a Price to Book Value of 16.52, an EV to EBITDA of 27.56, and an EV to Sales of 3.64, all of which suggest significant valuation concerns relative to its financial performance.
When compared to peers, Cogent Communications has a notably higher EV to EBITDA ratio than Lumen Technologies, Inc. at 6.67, and a worse P/E ratio than Frontier Communications, which stands at -34.45. This highlights the company's relative overvaluation in the telecom services sector. Additionally, the stock has underperformed against the S&P 500, with a year-to-date return of -50.80% compared to the index's gain of 12.22%, reinforcing the negative valuation sentiment.