Ciena Corporation (NYSE: CIEN) and Cisco Systems (NASDAQ:CSCO) are both mid-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.

Risk and Volatility

Ciena Corporation has a beta of 1.69, meaning that its stock price is 69% more volatile than the S&P 500. Comparatively, Cisco Systems has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500.

Profitability

This table compares Ciena Corporation and Cisco Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ciena Corporation 4.99% 25.53% 7.61%
Cisco Systems 20.02% 16.91% 8.61%

Insider & Institutional Ownership

75.4% of Cisco Systems shares are owned by institutional investors. 1.5% of Ciena Corporation shares are owned by company insiders. Comparatively, 0.1% of Cisco Systems 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.

Dividends

Cisco Systems pays an annual dividend of $1.16 per share and has a dividend yield of 3.5%. Ciena Corporation does not pay a dividend. Cisco Systems pays out 60.7% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Ciena Corporation and Cisco Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ciena Corporation $2.77 billion 1.14 $361.58 million $0.92 24.02
Cisco Systems $48.01 billion 3.45 $14.72 billion $1.91 17.51

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Ciena Corporation and Cisco Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ciena Corporation 0 3 19 0 2.86
Cisco Systems 0 11 20 0 2.65

Ciena Corporation currently has a consensus target price of $29.50, suggesting a potential upside of 33.48%. Cisco Systems has a consensus target price of $35.56, suggesting a potential upside of 6.33%. Given Ciena Corporation’s stronger consensus rating and higher probable upside, equities analysts clearly believe Ciena Corporation is more favorable than Cisco Systems.

Summary

Cisco Systems beats Ciena Corporation on 9 of the 16 factors compared between the two stocks.

Ciena Corporation Company Profile

Ciena Corporation is a network strategy and technology company, which provides solutions that enable a range of network operators to adopt communication architectures and deliver an array of services, relied upon by enterprise and consumer end users. It provides equipment, software and services that support the transport, switching, aggregation, service delivery and management of voice, video and data traffic on communications networks. It segments include Networking Platforms; Software and Software-Related Services, and Global Services. The Networking Platforms segment consists of Converged Packet Optical, Packet Networking and Optical Transport product portfolios. The software business is engaged in the development and licensing of element and network management software and software-related services that support its hardware offerings. It offers a suite of consulting and support services that help its customers to design, optimize, deploy and maintain their communications networks.

Cisco Systems Company Profile

Cisco Systems, Inc. designs and sells a range of products, provides services and delivers integrated solutions to develop and connect networks around the world. The Company operates through three geographic segments: Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific, Japan and China (APJC). The Company groups its products and technologies into various categories, such as Switching; Next-Generation Network (NGN) Routing; Collaboration; Data Center; Wireless; Service Provider Video; Security, and Other Products. In addition to its product offerings, the Company provides a range of service offerings, including technical support services and advanced services. The Company delivers its technology and services to its customers as solutions for their priorities, including cloud, video, mobility, security, collaboration and analytics. The Company serves customers, including businesses of all sizes, public institutions, governments and service providers.

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