Critical Contrast: Viavi Solutions (NASDAQ:VIAV) versus Ribbon Communications (NASDAQ:RBBN)

Ribbon Communications (NASDAQ:RBBN) and Viavi Solutions (NASDAQ:VIAV) are both technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.

Valuation & Earnings

This table compares Ribbon Communications and Viavi Solutions”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ribbon Communications	$844.56 million	0.28	$39.64 million	$0.08	16.50
Viavi Solutions	$1.52 billion	5.41	-$30.40 million	($0.15)	-222.53

Ribbon Communications has higher earnings, but lower revenue than Viavi Solutions. Viavi Solutions 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

70.9% of Ribbon Communications shares are owned by institutional investors. Comparatively, 95.5% of Viavi Solutions shares are owned by institutional investors. 4.0% of Ribbon Communications shares are owned by insiders. Comparatively, 1.2% of Viavi Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Ribbon Communications has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, Viavi Solutions has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Ribbon Communications and Viavi Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ribbon Communications	1	1	4	0	2.50
Viavi Solutions	1	2	6	0	2.56

Ribbon Communications currently has a consensus price target of $3.30, indicating a potential upside of 150.00%. Viavi Solutions has a consensus price target of $55.43, indicating a potential upside of 66.05%. Given Ribbon Communications’ higher possible upside, equities analysts plainly believe Ribbon Communications is more favorable than Viavi Solutions.

Profitability

This table compares Ribbon Communications and Viavi Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ribbon Communications	1.96%	19.91%	6.98%
Viavi Solutions	-2.00%	19.60%	7.48%

Summary

Ribbon Communications beats Viavi Solutions on 8 of the 14 factors compared between the two stocks.

About Ribbon Communications

Ribbon Communications Inc. provides communications technology in the United States, Europe, the Middle East, Africa, the Asia Pacific, and internationally. It operates through two segments, Cloud and Edge, and IP Optical Networks. The Cloud and Edge segment provides software and hardware products, solutions, and services for voice over internet protocol communications, voice over long-term evolution, and voice over 5G communications, and unified communications and collaboration. It also offers session border controllers; and network transformation products, such as signaling products, call controllers, media gateways, and application servers. This segment serves private, public, or hybrid cloud infrastructures, as well as data centers, enterprise premises, and service provider networks. The IP Optical Networks segment provides hardware and software products and solutions for IP networking, switching, routing, and optical transport for technologies, such as 5G, distributed cloud computing, and corresponding applications. It also offers multiple solutions, including 5G-native solutions for mobile-backhaul, metro and edge aggregation, core networking, data center interconnect, multi-service access, and transport solutions for wholesale carriers. This segment serves utilities, government, defense, finance, transportation, and education and research industries, as well as service providers and enterprises. The company was formerly known as Sonus Networks, Inc. and changed its name to Ribbon Communications Inc. in November 2017. Ribbon Communications Inc. was founded in 1997 and is headquartered in Plano, Texas.

About Viavi Solutions

Viavi Solutions, Inc. engages in the provision of network test, monitoring, and assurance solutions for communications service providers, enterprises, network equipment manufacturers, government and avionics. It operates through the following segments: Network Enablement, Service Enablement, and Optical Security and Performance. The Network Enablement segment offers an integrated portfolio of testing solutions that access the network to perform build-out and maintenance tasks. The Service Enablement segment covers solutions and services primarily for communication service providers, and enterprises that deliver and/or operate broadband and IP networks (fixed and mobile) supporting voice, video, and data services as well as a wide range of applications. The Optical Security and Performance segment leverages its core optical coating technologies and volume manufacturing capability to design, manufacture, and sell products targeting anti-counterfeiting, consumer and industrial, government, healthcare, and other markets. The company was founded in 1979 and is headquartered in Chandler, AZ.