Sonus Networks (NASDAQ: SONS) and Sierra Wireless (NASDAQ:SWIR) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, dividends, earnings, risk and profitabiliy.

Institutional & Insider Ownership

64.7% of Sonus Networks shares are held by institutional investors. Comparatively, 24.7% of Sierra Wireless shares are held by institutional investors. 7.7% of Sonus Networks shares are held by insiders. Comparatively, 2.0% of Sierra Wireless shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Sonus Networks has a beta of 2.1, meaning that its share price is 110% more volatile than the S&P 500. Comparatively, Sierra Wireless has a beta of 3.02, meaning that its share price is 202% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Sonus Networks and Sierra Wireless, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sonus Networks 1 1 5 0 2.57
Sierra Wireless 1 7 2 0 2.10

Sonus Networks currently has a consensus target price of $8.71, suggesting a potential upside of 25.12%. Sierra Wireless has a consensus target price of $23.89, suggesting a potential upside of 1.01%. Given Sonus Networks’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Sonus Networks is more favorable than Sierra Wireless.

Valuation & Earnings

This table compares Sonus Networks and Sierra Wireless’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sonus Networks $246.81 million 1.40 -$6.34 million ($0.60) -11.60
Sierra Wireless $634.60 million 1.19 $40.36 million $0.62 38.15

Sierra Wireless has higher revenue and earnings than Sonus Networks. Sonus Networks is trading at a lower price-to-earnings ratio than Sierra Wireless, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sonus Networks and Sierra Wireless’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sonus Networks -12.15% -6.18% -4.38%
Sierra Wireless 3.13% 9.16% 5.84%

Summary

Sierra Wireless beats Sonus Networks on 7 of the 13 factors compared between the two stocks.

Sonus Networks Company Profile

Sonus Networks, Inc. (Sonus) is a provider of networked solutions for communications service providers and enterprises to help them secure and unify their real-time communications infrastructures. The Company helps communications service providers and enterprises hold the session initiation protocol (SIP) and fourth generation (4G)/long term evolution (LTE)-based solutions, including voice over Internet protocol (VoIP), voice over wireless fidelity (VoWiFi), video and unified communications (UC) by securing and enabling Internet Protocol (IP) networks. Its products include session border controllers (SBCs), diameter signaling controllers (DSCs) and VoWiFi solutions. Sonus Products include Sonus GSX9000 Open Services Switch, Sonus T7000 Intelligent Switching System, Sonus Diameter Signaling Controllers, Sonus Signal Transfer Points, Sonus PSX Policy & Routing Server, Sonus WebRTC Services Solution, Sonus Network Management Solutions and Virtualized Mobile Core (VMC) Solution.

Sierra Wireless Company Profile

Sierra Wireless, Inc. is engaged in building the Internet of Things (IoT) with wireless solutions for organizations. The Company’s OEM Solution segment offers cellular embedded wireless modules for IoT connectivity, including an embedded application framework to support customer applications. The Company’s Enterprise Solution segment offers intelligent routers and gateways, including management tools and applications that enable cellular connectivity. The Company’s Cloud and Connectivity Services segment offers a cloud based platform for deploying and managing IoT applications, Smart SIM supported by mobile core networks, and managed wireless broadband services to enable customer IoT deployments. The Company offers a portfolio of second generation, third generation, and fourth generation cellular embedded wireless modules and gateways, integrated with its secure cloud and connectivity services. The Company offers its products to original equipment manufacturers (OEMs) and enterprises.

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