AudioCodes (NASDAQ: AUDC) and ARRIS International PLC (NASDAQ:ARRS) are both large-cap communications & networking – nec companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, profitability and institutional ownership.

Insider and Institutional Ownership

22.0% of AudioCodes shares are held by institutional investors. Comparatively, 86.8% of ARRIS International PLC shares are held by institutional investors. 48.8% of AudioCodes shares are held by company insiders. Comparatively, 0.9% of ARRIS International PLC shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for AudioCodes and ARRIS International PLC, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AudioCodes 0 1 2 0 2.67
ARRIS International PLC 0 2 5 0 2.71

AudioCodes currently has a consensus price target of $7.75, indicating a potential upside of 12.32%. ARRIS International PLC has a consensus price target of $33.57, indicating a potential upside of 19.13%. Given ARRIS International PLC’s stronger consensus rating and higher possible upside, analysts plainly believe ARRIS International PLC is more favorable than AudioCodes.

Risk and Volatility

AudioCodes has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500. Comparatively, ARRIS International PLC has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500.

Profitability

This table compares AudioCodes and ARRIS International PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AudioCodes 11.84% 8.33% 4.75%
ARRIS International PLC 2.51% 14.02% 5.89%

Earnings and Valuation

This table compares AudioCodes and ARRIS International PLC’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
AudioCodes $145.57 million 1.51 $16.23 million $0.54 12.78
ARRIS International PLC $6.83 billion 0.77 $18.10 million $0.87 32.39

ARRIS International PLC has higher revenue and earnings than AudioCodes. AudioCodes is trading at a lower price-to-earnings ratio than ARRIS International PLC, indicating that it is currently the more affordable of the two stocks.

Summary

ARRIS International PLC beats AudioCodes on 10 of the 14 factors compared between the two stocks.

About AudioCodes

AudioCodes Ltd. designs, develops and sells Voice over-Internet Protocol (VoIP) and converged VoIP, and data networking solutions, products and applications that facilitate Unified Communications (UC) and Contact Center (CC) services. The Company categorizes its products and services into two main business lines: network and technology. Network products consist of customer premises equipment (CPE), gateways for the enterprise and service provider (or carrier) markets and of carrier-grade-oriented low- and mid-density media gateways for service providers and Enterprise Session Border Controls (ESBCs). Complementing its media gateways and session border gateways as network products are its multi-service business routers (MSBR), Internet Protocol (IP) phones, media servers, mobile VoIP solutions and value added application products. Technology products consist of its chips and boards business products. Its products are deployed in enterprise, service provider cloud networks.

About ARRIS International PLC

ARRIS International plc is a media entertainment and data communications solutions provider. The Company operates in two segments: Customer Premises Equipment (CPE), and Network & Cloud (N&C). The Company enables service providers, including cable, telephone, and digital broadcast satellite operators, and media programmers to deliver media, voice and Internet Protocol (IP) data services to their subscribers. It is engaged in offering set-tops, digital video and IP television (IPTV) distribution systems, broadband access infrastructure platforms, and associated data and voice CPE, which it also sells directly to consumers through retail channels. Its solutions are complemented by an array of services, including technical support, repair and refurbishment, and system design and integration. The CPE segment consists of CPE Products-Video and CPE Products-Broadband. The N&C segment consists of Infrastructure Products, Cloud Software and Global Services.

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