Critical Analysis: Ciena (CIEN) & Viavi Solutions (VIAV)

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

Analyst Ratings

This is a summary of current recommendations for Ciena and Viavi Solutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ciena 0 2 19 0 2.90
Viavi Solutions 0 2 5 0 2.71

Ciena currently has a consensus target price of $28.55, suggesting a potential upside of 30.14%. Viavi Solutions has a consensus target price of $12.50, suggesting a potential upside of 38.27%. Given Viavi Solutions’ higher probable upside, analysts plainly believe Viavi Solutions is more favorable than Ciena.

Risk and Volatility

Ciena has a beta of 1.67, indicating that its share price is 67% more volatile than the S&P 500. Comparatively, Viavi Solutions has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Ciena 45.04% 18.32% 7.02%
Viavi Solutions 10.57% 8.99% 3.44%

Institutional and Insider Ownership

92.4% of Viavi Solutions shares are held by institutional investors. 1.5% of Ciena shares are held by insiders. Comparatively, 0.6% of Viavi Solutions shares are held 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.

Valuation and Earnings

This table compares Ciena and Viavi Solutions’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ciena $2.80 billion 1.13 $1.26 billion $6.92 3.17
Viavi Solutions $811.40 million 2.53 $166.90 million $0.36 25.11

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

Summary

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

Ciena Company Profile

Ciena Corporation is a network strategy and technology company, which provides solutions that enable a range of network operators to adopt communication architectures and deliver an array of services, relied upon by enterprise and consumer end users. It provides equipment, software and services that support the transport, switching, aggregation, service delivery and management of voice, video and data traffic on communications networks. It segments include Networking Platforms; Software and Software-Related Services, and Global Services. The Networking Platforms segment consists of Converged Packet Optical, Packet Networking and Optical Transport product portfolios. The software business is engaged in the development and licensing of element and network management software and software-related services that support its hardware offerings. It offers a suite of consulting and support services that help its customers to design, optimize, deploy and maintain their communications networks.

Viavi Solutions Company Profile

Viavi Solutions Inc. (Viavi) is a provider of network test, monitoring and assurance solutions to communications service providers, enterprises and their ecosystems. The Company also offers thin film optical coatings, providing light management solutions to anti-counterfeiting, consumer and industrial, government and healthcare and other markets. The Company’s segments include Network Enablement (NE), Service Enablement (SE), and Optical Security and Performance Products (OSP). The NE segment provides testing solutions that access the network to perform build-out and maintenance tasks. The SE segment offers solutions, which are embedded systems that yield network, service and application performance data. The OSP segment provides optical security solutions. The OSP segment’s security offerings for the currency market include Optically Variable Pigment (OVP), Optically Variable Magnetic Pigment (OVMP) and banknote thread substrates.

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