Meru Networks (NASDAQ: MERU) and China Telecom (NYSE:CHA) are both wireless telecommunications services – nec companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Analyst Ratings

This is a summary of current ratings for Meru Networks and China Telecom, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meru Networks 0 0 0 0 N/A
China Telecom 0 0 1 0 3.00

Valuation and Earnings

This table compares Meru Networks and China Telecom’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meru Networks N/A N/A N/A ($0.87) -1.86
China Telecom $53.05 billion 0.73 $2.71 billion $3.61 13.33

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

Institutional & Insider Ownership

0.4% of China Telecom shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

China Telecom pays an annual dividend of $1.21 per share and has a dividend yield of 2.5%. Meru Networks does not pay a dividend. China Telecom pays out 33.5% of its earnings in the form of a dividend.

Profitability

This table compares Meru Networks and China Telecom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Meru Networks -46.15% N/A -86.56%
China Telecom N/A N/A N/A

Risk & Volatility

Meru Networks has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500. Comparatively, China Telecom has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Summary

China Telecom beats Meru Networks on 8 of the 10 factors compared between the two stocks.

Meru Networks Company Profile

Meru Networks, Inc. (Meru) develops and markets a virtualized Wireless Local Area Network (WLAN) solution. The Company’s solution is built around its System Director Operating System, which runs on its controllers and access points. The Company offers additional products designed to deliver network management, diagnostics and security. The Company also offers support services related to its products, professional services, and training. Its products and services are sold through value added resellers, and distributors, as well as its sales force. Its System Director Operating System forms the core of its virtualized WLAN solution. It provides a family of controllers that run its System Director Operating System and work in conjunction with its access points. Its Wireless Fidelity (Wi-Fi) certified access points provide network connectivity for wireless devices. Its bring-your-own-device (BYOD) and policy management solutions are designed to automate secure guest access.

China Telecom Company Profile

China Telecom Corporation Limited is an investment holding company principally engaged in telecommunications and related businesses. The Company provides integrated information services, including wireline and mobile telecommunications services, Internet access services, information services and other value-added telecommunications services. The Company mainly operates its business in domestic market.

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