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Stockchase Insights COGECO Inc CGO-T WATCH Jul 18, 2025

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

CGO reported an EPS of $2.40, beating estimates of $2.18, while revenues came in at $758 million, a 2.4% decrease compared to last year (3.9% on a constant currency basis) due to the decline in the subscriber base. Adjusted EBITDA decreased slightly by 0.5% to $367.8 million. CGO reported fine results, but the market is concerned with the fact that revenue declined by around 3.9% on a constant currency basis for the quarter, and the company also revised its projections, expecting revenue to decline by low single digits, compared to the previous
projection of flat growth. CGO can be defined as a fairly cheap, stable cash cow with an attractive dividend yield. The company generates significant free cash flows, but the long-term growth prospects of the business are not attractive and are expected to gradually decline by 1%-2% over the next few years. For now, we think investors can give CGO some time to execute and be willing to sell if revenue continues its downward trend, but we think for investors who are seeking high dividend yields with a strong growth rate, we think there are better opportunities in the market elsewhere.
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BUY

Great assets. Capital expenditure is going down. Can provide a lot of products to clients. Slightly defensive in many ways. Would like to see the 1.3% dividend increased. Good story. He prefers BCE (BCE-T).

TOP PICK

Second biggest cable supplier in Ontario and Québec, along with 400,000 subscribers in Pennsylvania, Florida and Maryland. The big thing is, it is purely a distributor. It doesn’t have the content, so is indifferent as to which channels you choose to pick and pay for. Trading at 10X earnings and has a 1.9% dividend yield. Share price is down 13% while it is the least affected of any of the telcos.

PAST TOP PICK

(A Top Pick June 3/15. Down 2.1%.) You are able to get the minimum cable package without having all the channels you don’t want. This is the “pipes”, it doesn’t own content. Has a nice dividend.

BUY

A lot of the value comes from the cable. He likes it. Strong price momentum and good valuation. Stable ROE. Only a reasonable amount of debt. He likes it.

COMMENT

Despite a recent upgrade, he wouldn't buy this. (Though another has raised its taret price.) He prefers owning BCE, Telus or even Rogers because they are more diversified. Yes, the stock has done well and is recession-proof.

BUY

The issue with the share price is that some of the larger US cable companies are alluding to weak ad business. He thinks it is pretty strong for a Canadian cable company. The cable slowdown is more transient, just affecting the back half of the year. It has a nice yield. The family manages the company fairly well in his view.

BUY

Are protected from the giants (Rogers et al) because the CRTC is helping CGO get more wire lines. In the US, Cogeco is moving into streaming services, so they don't need to spend as much on capex as the giants. US operations are growing faster than here. So, their debt is lower than the giants. Is like an asset-lite telco. Can increase their dividend 10% annually, unlike Rogers. Pays a 5.5% yield. Low risk at 0.8 beta.

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