Sonus Networks (NASDAQ: SONS) and Finisar Corporation (NASDAQ:FNSR) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Profitability

This table compares Sonus Networks and Finisar Corporation’s 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%
Finisar Corporation 16.92% 13.11% 8.25%

Volatility & Risk

Sonus Networks has a beta of 2.09, meaning that its stock price is 109% more volatile than the S&P 500. Comparatively, Finisar Corporation has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Earnings and Valuation

This table compares Sonus Networks and Finisar Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sonus Networks $241.68 million 1.57 -$12.30 million ($0.60) -12.75
Finisar Corporation $1.45 billion 1.74 $274.41 million $2.13 10.41

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

Insider & Institutional Ownership

68.6% of Sonus Networks shares are owned by institutional investors. Comparatively, 86.3% of Finisar Corporation shares are owned by institutional investors. 7.7% of Sonus Networks shares are owned by company insiders. Comparatively, 1.0% of Finisar Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Sonus Networks and Finisar Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sonus Networks 1 1 5 0 2.57
Finisar Corporation 0 1 10 3 3.14

Sonus Networks presently has a consensus target price of $8.71, suggesting a potential upside of 13.83%. Finisar Corporation has a consensus target price of $32.79, suggesting a potential upside of 47.90%. Given Finisar Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Finisar Corporation is more favorable than Sonus Networks.

Summary

Finisar Corporation beats Sonus Networks on 12 of the 14 factors compared between the two stocks.

About Sonus Networks

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.

About Finisar Corporation

Finisar Corporation (Finisar) is a provider of optical subsystems and components that are used in data communication and telecommunication applications. The Company’s optical subsystems consist of transmitters, receivers, transceivers, transponders and active optical cables, which provide the fundamental optical-electrical or optoelectronic interface for interconnecting the electronic equipment used in these networks, including the switches, routers, and servers used in wireline networks. These products rely on the use of semiconductor lasers and photodetectors in conjunction with integrated circuits and optoelectronic packaging to provide a means for transmitting and receiving digital signals over fiber optic cable at speeds ranging from less than one gigabit per second (Gbps), to more than 100 Gbps, over distances of less than 10 meters to more than 2,000 kilometers, using a range of network protocols and physical configurations.

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