Silicom (NASDAQ: SILC) and Aruba Networks (NASDAQ:ARUN) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitabiliy, earnings and risk.

Insider and Institutional Ownership

25.4% of Silicom shares are held by institutional investors. 25.4% of Silicom shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Silicom and Aruba Networks, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Silicom 0 0 1 0 3.00
Aruba Networks 0 0 0 0 N/A

Silicom currently has a consensus target price of $67.00, suggesting a potential upside of 29.59%. Given Silicom’s higher probable upside, analysts clearly believe Silicom is more favorable than Aruba Networks.

Earnings and Valuation

This table compares Silicom and Aruba Networks’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Silicom $108.60 million 3.53 $21.32 million $1.93 26.79
Aruba Networks N/A N/A N/A N/A N/A

Silicom has higher revenue and earnings than Aruba Networks.

Dividends

Silicom pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. Aruba Networks does not pay a dividend. Silicom pays out 51.8% of its earnings in the form of a dividend.

Profitability

This table compares Silicom and Aruba Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Silicom 13.34% 11.94% 9.67%
Aruba Networks 2.67% 6.80% 3.49%

Summary

Silicom beats Aruba Networks on 9 of the 10 factors compared between the two stocks.

About Silicom

Silicom Ltd. (Silicom) is engaged in the design, manufacture, marketing and support of networking and data infrastructure solutions for a range of servers, server-based systems and communications devices. The Company’s products include server network interface cards with and without bypass (Server Adapters); Intelligent and programmable cards, with features, such as encryption, acceleration, data compression, redirection, time stamping, network capture solutions, field programmable gate array (FPGA) based ultra-low latency solutions, and/or other offload features and/or compute blades (Smart Cards), and standalone Products. The Company’s market segments for its products include network appliances; servers; data storage, including Big Data; The Cloud, virtualized data centers, with and without software-defined networking (SDN), and Internet of Things (IOT).

About Aruba Networks

Aruba Networks, Inc. is a global provider of enterprise mobility solutions. The Company develops markets and sell solutions that help solve its customers’ secure mobility requirements through its mobility-defined networks, a network architecture optimizes performance and trigger security actions that required manual intervention by information technology (IT) departments. Mobility-Defined Networks gather and correlate contextual data about user roles, device types, application flows and location, which is critical in dynamic, ever-changing mobility environments. This self-healing, self-optimizing approach to mobility reduces IT helpdesk tickets and offer data protection. Aruba Mobility-Defined Networks are consisted of three components such as, mobility-centric network infrastructure, access management and mobility applications.

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