Analyzing NetScout Systems (NASDAQ:NTCT) and Ribbon Communications (NASDAQ:RBBN)

Ribbon Communications (NASDAQ:RBBN) and NetScout Systems (NASDAQ:NTCT) are both technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Earnings & Valuation

This table compares Ribbon Communications and NetScout Systems”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ribbon Communications	$844.56 million	0.33	$39.64 million	$0.10	15.45
NetScout Systems	$859.48 million	3.21	$95.53 million	$1.64	23.16

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

Institutional and Insider Ownership

70.9% of Ribbon Communications shares are owned by institutional investors. Comparatively, 91.6% of NetScout Systems shares are owned by institutional investors. 4.0% of Ribbon Communications shares are owned by insiders. Comparatively, 4.7% of NetScout Systems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Ribbon Communications and NetScout Systems, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ribbon Communications	1	1	4	0	2.50
NetScout Systems	0	3	1	0	2.25

Ribbon Communications presently has a consensus target price of $3.20, indicating a potential upside of 107.12%. NetScout Systems has a consensus target price of $46.50, indicating a potential upside of 22.41%. Given Ribbon Communications’ stronger consensus rating and higher probable upside, analysts clearly believe Ribbon Communications is more favorable than NetScout Systems.

Risk and Volatility

Ribbon Communications has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, NetScout Systems has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500.

Profitability

This table compares Ribbon Communications and NetScout Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ribbon Communications	2.32%	20.61%	7.29%
NetScout Systems	13.71%	9.25%	6.59%

Summary

NetScout Systems beats Ribbon Communications 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 NetScout Systems

NetScout Systems, Inc. provides service assurance and cybersecurity solutions for protect digital business services against disruptions in the United States, Europe, Asia, and internationally. The company offers nGeniusONE management software that enables customers to predict, preempt, and resolve network and service delivery problems, as well as facilitate the optimization and capacity planning of their network infrastructures; and specialized platforms and analytic modules that enable its customers to analyze and troubleshoot traffic in radio access and Wi-Fi networks. It also provides nGeniusPULSE, an active testing tool that enables enterprises to identify infrastructure performance issues and determine application availability, reliability, and performance; and nGenius Business Analytics solution, which enables service providers to analyze their network traffic. In addition, the company offers ISNG, an advanced passive network probe; packet flow systems that deliver targeted network traffic access to various monitoring and security tools and systems; and a suite of test access points that enable non-disruptive access to network traffic. Further, it provides cybersecurity solutions to protect their networks against distributed denial of service attacks under the Arbor brand, such as Arbor Sightline, Arbor Threat Mitigation System, Arbor Insight, Arbor Edge Defense, and Arbor Cloud. Additionally, the company offers advanced threat detection solutions, such as Omnis Cyber Investigator. It serves enterprise customers in various industries, including financial services, technology, manufacturing, healthcare, utilities, education, transportation, and retail; mobile operators, wireline operators, cable operators, Internet service providers, and cloud providers; and governmental agencies through a direct sales force, and indirect reseller and distribution channels. The company was incorporated in 1984 and is headquartered in Westford, Massachusetts.