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As part of our ongoing series here at The Acquirer’s Multiple, each week we focus on one of the stocks from our Stock Screeners, and why it might be a deeply undervalued gem.

The stock this week is:

Cogeco Inc. (CGO.TO)

Cogeco Inc. is a Canadian telecommunications and media company with operations primarily in Ontario and Québec, as well as the U.S. through its subsidiary, Breezeline. The company provides broadband, video, and telephony services to residential and commercial customers. Known for its disciplined capital allocation and conservative balance sheet, Cogeco has quietly built a resilient cash-generating business in an industry dominated by giants.

One of the metrics we use in our screens is IV/P (Intrinsic Value to Price). Let us simplify what it means:

What is IV/P (Intrinsic Value to Price)?

IV/P tells you if a stock is a good deal based on how much value you’re getting for the price you pay.

The Calculation:

It combines a stock’s earning power, growth potential, and what it’s returning to shareholders (via dividends and buybacks) to calculate its Implied Value — what the business is worth based on its fundamentals.

The Interpretation:

• IV/P > 1: You’re getting more value than you’re paying for — a potential bargain.
• IV/P < 1: You’re paying more than the business is worth — possibly overvalued.

If IV/P is very high, it signals the stock might be trading at a deep discount.

IV/P for Cogeco: 3.80

Cogeco currently has an IV/P of 3.80, meaning the stock’s implied value is calculated to be 3.8 times greater than its current price. In other words:

For every $1 you invest, you’re potentially getting $3.80 of value.

That’s a compelling value proposition for investors seeking high-conviction bargains.

Supporting Metrics:

• Free Cash Flow Yield: 47.00%
  This extraordinarily high FCF Yield suggests Cogeco generates nearly half its market cap in free cash flow annually — a rare figure indicating exceptional value.
• Dividend Yield: 5.49%
  A healthy, sustainable dividend signals confidence in recurring cash flow and shareholder commitment.
• Acquirer’s Multiple (AM): 5.80
  A low AM reflects an attractive valuation on enterprise value relative to operating income — another strong sign of undervaluation.

Why Might Cogeco Be Undervalued?

1. Small-Cap & Canadian Discount:
   As a mid-sized Canadian firm, Cogeco doesn’t attract the same attention as larger telecoms or U.S. peers, which may leave it mispriced.
2. Unsexy but Profitable Business:
   Cable and telecom aren’t flashy, but they’re recurring, profitable, and defensible — traits often overlooked in momentum-driven markets.
3. Underappreciated Cash Engine:
   With limited growth but robust cash flow, Cogeco might not appeal to growth investors — but for value-focused buyers, it’s a quietly compounding machine.

Conclusion:

With an IV/P of 3.80, a sky-high FCF Yield of 47%, and a solid dividend, Cogeco Inc. (CGO.TO) appears to be a textbook example of deep value. For investors seeking cash-rich businesses trading far below intrinsic worth, Cogeco offers a compelling case for closer inspection — especially in an environment where quality cash flow is at a premium.

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