Gilat Satellite Networks (NASDAQ: GILT) and Ribbon Communications (NASDAQ:RBBN) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, valuation, earnings, dividends and profitability.

Volatility and Risk

Gilat Satellite Networks has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Ribbon Communications has a beta of 2.08, meaning that its share price is 108% more volatile than the S&P 500.

Insider & Institutional Ownership

7.9% of Gilat Satellite Networks shares are held by institutional investors. Comparatively, 32.3% of Ribbon Communications shares are held by institutional investors. 1.1% of Gilat Satellite Networks shares are held by company insiders. Comparatively, 7.7% of Ribbon Communications shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Gilat Satellite Networks and Ribbon Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gilat Satellite Networks $279.55 million 1.60 -$5.34 million $0.15 54.53
Ribbon Communications $252.59 million 3.18 -$13.93 million ($0.45) -17.40

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

Analyst Ratings

This is a summary of recent ratings for Gilat Satellite Networks and Ribbon Communications, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gilat Satellite Networks 0 0 0 0 N/A
Ribbon Communications 1 1 4 0 2.50

Ribbon Communications has a consensus price target of $7.05, suggesting a potential downside of 9.96%. Given Ribbon Communications’ higher probable upside, analysts plainly believe Ribbon Communications is more favorable than Gilat Satellite Networks.

Profitability

This table compares Gilat Satellite Networks and Ribbon Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gilat Satellite Networks 2.83% 7.58% 4.20%
Ribbon Communications -8.82% -1.87% -1.32%

Summary

Gilat Satellite Networks beats Ribbon Communications on 7 of the 13 factors compared between the two stocks.

About Gilat Satellite Networks

Gilat Satellite Networks Ltd. is a provider of satellite-based broadband communications. The Company operates through three segments: Commercial, Mobility and Services divisions. The Company designs and manufactures satellite ground segment and networking communications equipment, which it sells to its customers either as network components (modems, Block Up converters (BUCs), antennas) or as complete network solutions (which include hubs and related terminals and services) or turnkey projects. The equipment that the Company develops includes commercial Very Small Aperture Terminals (VSAT) systems, defense and homeland security satellite communications systems, solid-state power amplifiers (SSPAs), BUCs, low-profile antennas, on-the-Move/on-the-Pause terminals and modems. The Company’s equipment is used by satellite operators, service providers, telecommunications operators, system integrators, government and defense organizations, large corporations and enterprises.

About Ribbon Communications

Sonus Networks, Inc., formerly Solstice Sapphire Investments, Inc., 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, and Sonus Network Management Solutions.

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