Analyzing Tellabs (TLAB) & Brocade Communications Systems (BRCD)
Tellabs (NASDAQ: TLAB) and Brocade Communications Systems (NASDAQ:BRCD) are both technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.
Brocade Communications Systems pays an annual dividend of $0.22 per share and has a dividend yield of 1.7%. Tellabs does not pay a dividend. Brocade Communications Systems pays out 314.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares Tellabs and Brocade Communications Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Brocade Communications Systems||-3.56%||-3.07%||-1.62%|
Valuation & Earnings
This table compares Tellabs and Brocade Communications Systems’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Brocade Communications Systems||$2.35 billion||2.24||$213.81 million||$0.07||181.29|
Brocade Communications Systems has higher revenue and earnings than Tellabs. Tellabs is trading at a lower price-to-earnings ratio than Brocade Communications Systems, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
83.7% of Brocade Communications Systems shares are owned by institutional investors. 1.8% of Brocade Communications Systems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This is a summary of current ratings for Tellabs and Brocade Communications Systems, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Brocade Communications Systems||1||3||0||0||1.75|
Brocade Communications Systems has a consensus target price of $12.83, indicating a potential upside of 1.13%.
Brocade Communications Systems beats Tellabs on 5 of the 9 factors compared between the two stocks.
Tellabs Company Profile
Tellabs, Inc. is engaged in designing and marketing equipment and services to communications-services providers worldwide. The company operates in four segments: optical, data, access and services. Its products and services, in combination with its Tellabs 8000 Intelligent Network Manager, enables its customers to deliver wireless and wireline voice, data and video services to business and residential customers. It sells its products domestically and internationally through its field sales force and distributors/partners. In December 2013, Marlin Equity Partners LLC, through its Blackhawk Merger Sub Inc wholly-owned subsidiary, acquired the entire share capital of Tellabs Inc.
Brocade Communications Systems Company Profile
Brocade Communications Systems, Inc. (Brocade) is a supplier of networking hardware, software and services, including storage area networking (SAN) solutions and Internet protocol (IP) networking solutions for businesses and organizations of various types and sizes. The Company operates through three segments: SAN Products, IP Networking Products and Global Services. The SAN Products segment includes infrastructure products and solutions that help customers develop and deploy storage and server consolidation, disaster recovery and data security. The IP Networking Products segment includes Layer 2 and Layer 3 Ethernet switches, and routers to connect users over private and public networks. The Global Services segment includes break or fix maintenance, installation, consulting, network management and software maintenance, and post-contract customer support. Its products enable customers to deploy architectures and technologies, including virtualization and cloud computing.
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