Clearfield (NASDAQ: CLFD) and Communications Systems (NASDAQ:JCS) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, earnings, profitability, institutional ownership and valuation.

Profitability

This table compares Clearfield and Communications Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Clearfield 6.87% 8.12% 7.51%
Communications Systems -9.55% -14.44% -12.11%

Valuation & Earnings

This table compares Clearfield and Communications Systems’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Clearfield $76.58 million 2.53 $9.17 million $0.39 35.64
Communications Systems $91.24 million 0.43 -$1.87 million ($0.98) -4.45

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

Insider and Institutional Ownership

27.4% of Clearfield shares are owned by institutional investors. Comparatively, 31.8% of Communications Systems shares are owned by institutional investors. 18.3% of Clearfield shares are owned by company insiders. Comparatively, 17.5% of Communications Systems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Communications Systems pays an annual dividend of $0.16 per share and has a dividend yield of 3.7%. Clearfield does not pay a dividend. Communications Systems pays out -16.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent recommendations for Clearfield and Communications Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Clearfield 0 0 1 0 3.00
Communications Systems 0 0 1 0 3.00

Clearfield currently has a consensus target price of $15.00, indicating a potential upside of 7.91%. Communications Systems has a consensus target price of $6.00, indicating a potential upside of 37.61%. Given Communications Systems’ higher possible upside, analysts clearly believe Communications Systems is more favorable than Clearfield.

Volatility and Risk

Clearfield has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500. Comparatively, Communications Systems has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500.

Summary

Clearfield beats Communications Systems on 8 of the 13 factors compared between the two stocks.

Clearfield Company Profile

Clearfield, Inc. manufactures, markets and sells fiber management and enclosure platform that consolidates, distributes and protects fiber as it moves from the inside plant to the outside plant and all the way to the home, business and cell site. The Company’s products include Clearview Cassette, which is the building block of its product platform; Connectivity and Optical Components; FieldSmart, which is a series of panels, cabinets, wall boxes and other enclosures that house the Clearview components; FieldShield, which is a fiber delivery method for broadband deployment; CraftSmart, which is a line of optical protection field enclosures, and Cable Assemblies. Its products are sold across broadband service providers, including traditional telephone companies, competitive local exchange carriers, multiple service operators (cable television), wireless service providers, and municipal-owned utilities that utilize fiber in their service offerings to businesses and consumers.

Communications Systems Company Profile

Communications Systems, Inc. (CSI) operates directly and through its subsidiaries located in the United States, Costa Rica and the United Kingdom. The Company operates through three segments: Suttle, Transition Networks and JDL Technologies (JDL). The Company provides physical connectivity infrastructure products and services for global deployments of broadband networks. The Company is principally engaged through its subsidiary and business unit, Suttle, Inc., in the manufacture and sale of connectivity infrastructure products for broadband and voice communications, and through its another subsidiary and business unit, Transition Networks, Inc., in the manufacture and sale of core media conversion products for broadband networks. Through its JDL Technologies, Inc. subsidiary and business unit, CSI provides information technology (IT) solutions, including network design, computer infrastructure installations, IT service management, network security and network operation services.

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