Contrasting Oclaro (OCLR) & Sonus Networks (SONS)

Oclaro (NASDAQ: OCLR) and Sonus Networks (NASDAQ:SONS) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitabiliy, earnings, dividends and valuation.

Profitability

This table compares Oclaro and Sonus Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Oclaro 21.28% 27.63% 20.69%
Sonus Networks -12.15% -6.18% -4.38%

Volatility & Risk

Oclaro has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500. Comparatively, Sonus Networks has a beta of 2.1, suggesting that its share price is 110% more volatile than the S&P 500.

Institutional and Insider Ownership

72.8% of Oclaro shares are owned by institutional investors. Comparatively, 64.7% of Sonus Networks shares are owned by institutional investors. 2.3% of Oclaro shares are owned by insiders. Comparatively, 7.7% of Sonus Networks shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for Oclaro and Sonus Networks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oclaro 0 0 10 1 3.09
Sonus Networks 1 1 5 0 2.57

Oclaro presently has a consensus target price of $13.39, suggesting a potential upside of 54.04%. Sonus Networks has a consensus target price of $8.71, suggesting a potential upside of 25.12%. Given Oclaro’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Oclaro is more favorable than Sonus Networks.

Valuation and Earnings

This table compares Oclaro and Sonus Networks’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Oclaro $600.97 million 2.42 $139.38 million $0.75 11.59
Sonus Networks $246.81 million 1.40 -$6.34 million ($0.60) -11.60

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

Summary

Oclaro beats Sonus Networks on 12 of the 14 factors compared between the two stocks.

Oclaro Company Profile

Oclaro, Inc. is a provider of optical components, modules and subsystems for the core optical transport, service provider, enterprise and data center markets. The Company provides various solutions for optical networks and interconnects driving the next wave of streaming video, cloud computing, application virtualization and other bandwidth-intensive and high-speed applications. The Company’s product offerings include client side transceivers, line side transceivers, tunable laser transmitters, lithium niobate modulators, transponder modules, and discrete lasers and receivers. It designs, manufactures and markets optical components, modules and subsystems that generate, detect, combine and separate light signals in optical communications networks. The Company supplies transmission products at the component level and the module level into 10 gigabits per second (Gb/s), 40 Gb/s and 100 Gb/s communications solutions.

Sonus Networks Company Profile

Sonus Networks, Inc. (Sonus) is a provider of networked solutions for communications service providers and enterprises to help them secure and unify their real-time communications infrastructures. The Company helps communications service providers and enterprises hold the session initiation protocol (SIP) and fourth generation (4G)/long term evolution (LTE)-based solutions, including voice over Internet protocol (VoIP), voice over wireless fidelity (VoWiFi), video and unified communications (UC) by securing and enabling Internet Protocol (IP) networks. Its products include session border controllers (SBCs), diameter signaling controllers (DSCs) and VoWiFi solutions. Sonus Products include Sonus GSX9000 Open Services Switch, Sonus T7000 Intelligent Switching System, Sonus Diameter Signaling Controllers, Sonus Signal Transfer Points, Sonus PSX Policy & Routing Server, Sonus WebRTC Services Solution, Sonus Network Management Solutions and Virtualized Mobile Core (VMC) Solution.

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