Critical Analysis: Lumentum (LITE) vs. Ribbon Communications (RBBN)
Lumentum (NASDAQ: LITE) and Ribbon Communications (NASDAQ:RBBN) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, institutional ownership, analyst recommendations and profitability.
This table compares Lumentum and Ribbon Communications’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and target prices for Lumentum and Ribbon Communications, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Lumentum presently has a consensus price target of $68.07, indicating a potential upside of 46.71%. Ribbon Communications has a consensus price target of $7.05, indicating a potential downside of 7.84%. Given Lumentum’s stronger consensus rating and higher probable upside, analysts clearly believe Lumentum is more favorable than Ribbon Communications.
Valuation and Earnings
This table compares Lumentum and Ribbon Communications’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Lumentum||$1.00 billion||2.87||-$102.50 million||($1.52)||-30.53|
|Ribbon Communications||$252.59 million||3.11||-$13.93 million||($0.45)||-17.00|
Ribbon Communications has lower revenue, but higher earnings than Lumentum. Lumentum is trading at a lower price-to-earnings ratio than Ribbon Communications, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
95.7% of Lumentum shares are owned by institutional investors. Comparatively, 32.3% of Ribbon Communications shares are owned by institutional investors. 0.8% of Lumentum shares are owned by company insiders. Comparatively, 7.7% of Ribbon Communications shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Volatility & Risk
Lumentum has a beta of 0.83, meaning that its share price is 17% 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.
Lumentum beats Ribbon Communications on 7 of the 13 factors compared between the two stocks.
Lumentum Company Profile
Lumentum Holdings Inc. is a provider of optical and photonic products for a range of end market applications, including data communications (Datacom) and telecommunications (Telecom) networking and commercial lasers (commercial lasers) for manufacturing, inspection and life-science applications. The Company operates in two segments: Optical Communications (OpComms) and Commercial Lasers (Lasers). The Company’s OpComms products include a range of components, modules and subsystems to support and maintain customers in its two primary markets: Telecom and Datacom. The Company’s Lasers products serve customers in markets and applications, such as manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining, such as drilling in printed circuit boards, wafer singulation and solar cell scribing. The Company’s customers include original equipment manufacturers (OEMs).
Ribbon Communications Company Profile
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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