Reviewing Silicom (NASDAQ:SILC) and Ciena (NYSE:CIEN)

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

Institutional and Insider Ownership

92.0% of Ciena shares are held by institutional investors. Comparatively, 52.8% of Silicom shares are held by institutional investors. 0.6% of Ciena shares are held by company insiders. Comparatively, 25.4% of Silicom shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Ciena has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500. Comparatively, Silicom has a beta of 1.57, suggesting that its stock price is 57% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Ciena and Silicom, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ciena	0	6	13	1	2.75
Silicom	1	0	1	0	2.00

Ciena presently has a consensus price target of $483.47, suggesting a potential upside of 38.75%. Silicom has a consensus price target of $60.00, suggesting a potential upside of 30.46%. Given Ciena’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Ciena is more favorable than Silicom.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ciena	10.87%	25.33%	11.27%
Silicom	-12.98%	-8.37%	-6.26%

Valuation & Earnings

This table compares Ciena and Silicom”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ciena	$4.77 billion	10.36	$123.34 million	$4.48	77.78
Silicom	$61.93 million	4.27	-$11.48 million	($1.71)	-26.89

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

Summary

Ciena beats Silicom on 13 of the 15 factors compared between the two stocks.

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.

About Silicom

Silicom Ltd., together with its subsidiaries, designs, manufactures, markets, and supports networking and data infrastructure solutions for servers, server-based systems, and communications devices. It offers server network interface cards; and smart cards, such as smart server adapters, which include redirector and switching cards, encryption and data compression hardware acceleration cards, forward error correction acceleration and offloading cards, time synchronization cards, and field programmable gate array-based cards. The company also provides virtualized and universal customer-premises equipment; and edge devices for SD-WAN, secure access service edge, Telco dedicated routers, and NFV deployments. It serves original equipment manufacturing, cloud, telco, mobile, and related service provider markets. The company operates in the United States, North America, Israel, Europe, and the Asia Pacific. Silicom Ltd. was incorporated in 1987 and is headquartered in Kfar Saba, Israel.