DragonWave, Inc.(USA) (NASDAQ: DRWI) and Methode Electronics (NYSE:MEI) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Earnings and Valuation

This table compares DragonWave, Inc.(USA) and Methode Electronics’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DragonWave, Inc.(USA) N/A N/A N/A ($2.80) -0.09
Methode Electronics $816.50 million 1.76 $149.90 million $2.48 15.75

Methode Electronics has higher revenue and earnings than DragonWave, Inc.(USA). DragonWave, Inc.(USA) is trading at a lower price-to-earnings ratio than Methode Electronics, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

14.7% of DragonWave, Inc.(USA) shares are held by institutional investors. Comparatively, 90.2% of Methode Electronics shares are held by institutional investors. 4.4% of Methode Electronics shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for DragonWave, Inc.(USA) and Methode Electronics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DragonWave, Inc.(USA) 2 0 2 0 2.00
Methode Electronics 0 1 3 0 2.75

DragonWave, Inc.(USA) currently has a consensus target price of $2.23, suggesting a potential upside of 792.00%. Methode Electronics has a consensus target price of $45.50, suggesting a potential upside of 16.52%. Given DragonWave, Inc.(USA)’s higher probable upside, research analysts clearly believe DragonWave, Inc.(USA) is more favorable than Methode Electronics.

Risk & Volatility

DragonWave, Inc.(USA) has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, Methode Electronics has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Profitability

This table compares DragonWave, Inc.(USA) and Methode Electronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DragonWave, Inc.(USA) -48.04% N/A -42.89%
Methode Electronics 11.38% 18.81% 14.16%

Dividends

Methode Electronics pays an annual dividend of $0.36 per share and has a dividend yield of 0.9%. DragonWave, Inc.(USA) does not pay a dividend. Methode Electronics pays out 14.5% of its earnings in the form of a dividend.

Summary

Methode Electronics beats DragonWave, Inc.(USA) on 10 of the 13 factors compared between the two stocks.

About DragonWave, Inc.(USA)

DragonWave Inc (DragonWave) is a provider of packet microwave solutions for Internet protocol (IP) networks. The Company operates through broadband wireless backhaul equipment segment. The principal application of DragonWave’s products is mobile network backhaul. Additional applications include leased line replacement, last mile fiber extension and enterprise networks. The Company’s product lines include Harmony, Horizon, Avenue and NetViewer. The Harmony product line is a multi-service wireless platform enabling time division multiplexing (TDM) and packet-based services across wireless or wireline infrastructure. The Company’s Horizon product family is an Ethernet microwave portfolio and consists of Horizon Compact+ and Horizon Quantum. Its NetViewer is a multi-service, multi-product network management platform. The NetViewer enables provisioning, management, monitoring and configuration across the line of products in a single graphical user interface (GUI)-based system.

About Methode Electronics

Methode Electronics, Inc. (Methode) is a manufacturer of component and subsystem devices. The Company designs, manufactures and markets devices employing electrical, radio remote control, electronic, wireless and sensing technologies. The Company operates through segments, including Automotive, Interface, Power Products and Other. The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile original equipment manufacturers (OEMs). The Interface segment provides a range of copper and fiber-optic interface and interface solutions. The Power Products segment manufactures braided flexible cables, current-carrying laminated bus devices, custom power-product assemblies, such as PowerRail solution, high-current low voltage flexible power cabling systems and powder coated bus bars. The Other segment includes medical devices, inverters and battery systems, and insulated gate bipolar transistor solutions.

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