Ciena (NYSE:CIEN) and Ericsson (NASDAQ:ERIC) Head-To-Head Review

Ericsson (NASDAQ:ERIC) and Ciena (NYSE:CIEN) are both large-cap technology companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Valuation and Earnings

This table compares Ericsson and Ciena”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ericsson	$24.19 billion	1.43	$2.91 billion	$0.78	13.17
Ciena	$4.77 billion	12.73	$123.34 million	$3.00	142.97

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

Profitability

This table compares Ericsson and Ciena’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ericsson	10.72%	20.63%	7.61%
Ciena	7.87%	18.15%	8.63%

Insider & Institutional Ownership

8.0% of Ericsson shares are held by institutional investors. Comparatively, 92.0% of Ciena shares are held by institutional investors. 0.6% of Ciena shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Ericsson and Ciena, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ericsson	2	5	2	0	2.00
Ciena	0	7	13	0	2.65

Ericsson currently has a consensus target price of $11.00, suggesting a potential upside of 7.11%. Ciena has a consensus target price of $530.56, suggesting a potential upside of 23.69%. Given Ciena’s stronger consensus rating and higher probable upside, analysts plainly believe Ciena is more favorable than Ericsson.

Risk & Volatility

Ericsson has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Ciena has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Summary

Ciena beats Ericsson on 10 of the 14 factors compared between the two stocks.

About Ericsson

Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides mobile connectivity solutions for telcom operators and enterprise customers in various sectors in North America, Europe, Latin America, the Middle East, Africa, North East Asia, South East Asia, Oceania, and India. It operates in four segments: Networks; Cloud Software and Services; Enterprise; and Other. The Networks segment offers radio access network (RAN) solutions for various network spectrum bands, including purpose-built and open RAN-prepared hardware and software. This segment also provides cloud RAN; transport solutions; passive and active antennas; and a range of service portfolios covering network deployment and support. The Cloud Software and Services segment offers core networks, business and operational support systems, network design and optimization, and managed network services. The Enterprise segment offers a global communications platform, including cloud-based unified communications as a service, contact center as a service, and communications platform as a service; enterprise wireless solutions comprising private wireless networks and wireless wan pre-packaged solutions; and technologies and new business solutions, such as mobile financial services, security solutions, and advertising services. The Other segment includes Redbee media that prepares and distributes live and video services for broadcasters, sports leagues, and communications service providers. It offers its services through wholesalers and distributors. The company was formerly known as Allmanna Telefon AB LM Ericsson and changed its name to Telefonaktiebolaget LM Ericsson (publ) in January 1926. Telefonaktiebolaget LM Ericsson (publ) was founded in 1876 and is headquartered in Stockholm, Sweden.

About Ciena

Ciena Corporation provides hardware and software services for delivery of video, data, and voice traffic metro, aggregation, and access communications network worldwide. The company’s Networking Platforms segment offers convergence of coherent optical transport, open optical networking, optical transport network switching, IP routing, and switching services. Its products include 6500 Packet-Optical Platform, Waveserver stackable interconnect system, and the 6500 Reconfigurable line system, and the 5400 family of Packet-Optical platforms, as well as 8100 coherent routing platforms; 3000 family of service delivery switches and the 5000 family of service aggregation switches, as well as 8700 Packetwave Platform and 6500 Packet Transport System. This segment also sells operating system software and enhanced software features embedded in each of its products. The company’s Blue Planet Automation Software and Services segment provides multi-domain service orchestration, inventory, route optimization and analysis, multi-cloud orchestration, and unified assurance and analytics services. Its Platform Software and Service segment offers MCP domain controller solution, and OneControl unified management system, as well as planning tools. The company’s Global Services segment provides maintenance support and training, installation and deployment, and consulting and network design services. Ciena Corporation was incorporated in 1992 and is headquartered in Hanover, Maryland.