Analyzing NetScout Systems (NASDAQ:NTCT) and Ubiquiti (NYSE:UI)

Ubiquiti (NYSE:UI) and NetScout Systems (NASDAQ:NTCT) are both technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.

Risk & Volatility

Ubiquiti has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500. Comparatively, NetScout Systems has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500.

Insider & Institutional Ownership

4.0% of Ubiquiti shares are owned by institutional investors. Comparatively, 91.6% of NetScout Systems shares are owned by institutional investors. 93.1% of Ubiquiti shares are owned by insiders. Comparatively, 4.7% of NetScout Systems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Ubiquiti and NetScout Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ubiquiti	30.43%	95.62%	56.55%
NetScout Systems	13.71%	9.25%	6.59%

Valuation & Earnings

This table compares Ubiquiti and NetScout Systems”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ubiquiti	$3.10 billion	11.22	$711.92 million	$15.56	36.89
NetScout Systems	$883.16 million	3.27	$95.53 million	$1.64	24.19

Ubiquiti has higher revenue and earnings than NetScout Systems. NetScout Systems is trading at a lower price-to-earnings ratio than Ubiquiti, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings for Ubiquiti and NetScout Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ubiquiti	1	0	2	1	2.75
NetScout Systems	0	3	0	1	2.50

Ubiquiti presently has a consensus target price of $750.67, suggesting a potential upside of 30.78%. NetScout Systems has a consensus target price of $35.50, suggesting a potential downside of 10.51%. Given Ubiquiti’s stronger consensus rating and higher possible upside, analysts clearly believe Ubiquiti is more favorable than NetScout Systems.

Summary

Ubiquiti beats NetScout Systems on 13 of the 14 factors compared between the two stocks.

About Ubiquiti

Ubiquiti Inc. develops networking technology for service providers, enterprises, and consumers. The company develops technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home, and personal use. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems, and routing and related software; and enterprise product platforms provide wireless LAN infrastructure, video surveillance products, switching and routing solutions, security gateways, door access systems, and other WLAN products. The company also provides technology platforms, such as airMAX, which include proprietary protocols that contain technologies for minimizing signal noise; EdgeMAX, a software and system routing platform; airFiber, a wireless backhaul point-to-point radio system; and UFiber GPON, a plug and play fiber network technology to build high speed fiber internet networks. In addition, it offers UniFi Gateway Console, an enterprise class router and security gateway device; UniFi Wi-Fi, an enterprise Wi-Fi system; UniFi Protect, a video surveillance system, which provides statistical reporting and advanced analytics; UniFi Switch that deliver performance, switching, and power of ethernet support for enterprise networks; UniFi Access, a door access system; and UniFi Talk, a plug-and-play phone system and VoIP subscription service. Further, the company provides base stations, radios, backhaul equipment, and customer premise equipment; embedded radio products; and antennas. It serves customers through a network of distributors, online retailers, and direct to customers worldwide. The company was formerly known as Ubiquiti Networks, Inc. and changed its name to Ubiquiti Inc. in August 2019. Ubiquiti Inc. was incorporated in 2003 and is headquartered in New York, New York.

About NetScout Systems

NetScout Systems, Inc. provides service assurance and cybersecurity solutions for protect digital business services against disruptions in the United States, Europe, Asia, and internationally. The company offers nGeniusONE management software that enables customers to predict, preempt, and resolve network and service delivery problems, as well as facilitate the optimization and capacity planning of their network infrastructures; and specialized platforms and analytic modules that enable its customers to analyze and troubleshoot traffic in radio access and Wi-Fi networks. It also provides nGeniusPULSE, an active testing tool that enables enterprises to identify infrastructure performance issues and determine application availability, reliability, and performance; and nGenius Business Analytics solution, which enables service providers to analyze their network traffic. In addition, the company offers ISNG, an advanced passive network probe; packet flow systems that deliver targeted network traffic access to various monitoring and security tools and systems; and a suite of test access points that enable non-disruptive access to network traffic. Further, it provides cybersecurity solutions to protect their networks against distributed denial of service attacks under the Arbor brand, such as Arbor Sightline, Arbor Threat Mitigation System, Arbor Insight, Arbor Edge Defense, and Arbor Cloud. Additionally, the company offers advanced threat detection solutions, such as Omnis Cyber Investigator. It serves enterprise customers in various industries, including financial services, technology, manufacturing, healthcare, utilities, education, transportation, and retail; mobile operators, wireline operators, cable operators, Internet service providers, and cloud providers; and governmental agencies through a direct sales force, and indirect reseller and distribution channels. The company was incorporated in 1984 and is headquartered in Westford, Massachusetts.