Cogent Communications Shares Popped: What You Need to Know (CCOI)

Cogent Communications Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Internet service provider Cogent Communications (Nasdaq: CCOI ) jumped 10% in early trading after the company released earnings.

So what: Traffic growth of 13% from last quarter helped push revenues to $69.5 million and traffic up 41% from last year. Earnings per share of $0.06 beat the breakeven results analysts were expecting.

Now what: The solid traffic increase and positive earnings are a nice turnaround from losses reported over the last year. Still, the slow and steady improvement isn't fast enough to get me excited enough to buy the bounce today. Next year's estimates put Cogent's forward P/E ratio at 81, a hefty price to pay for a company that isn't growing revenues all that quickly.

Interested in more info on Cogent Communications? Add it to your watchlist.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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