Head to Head Comparison: Finisar (FNSR) & Cisco Systems (CSCO)

Finisar (NASDAQ: FNSR) and Cisco Systems (NASDAQ:CSCO) are both mid-cap computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, earnings, valuation, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Finisar and Cisco Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Finisar 0 3 9 2 2.93
Cisco Systems 0 13 19 0 2.59

Finisar currently has a consensus target price of $30.12, indicating a potential upside of 72.28%. Cisco Systems has a consensus target price of $36.86, indicating a potential downside of 1.48%. Given Finisar’s stronger consensus rating and higher probable upside, equities analysts plainly believe Finisar is more favorable than Cisco Systems.

Insider and Institutional Ownership

91.5% of Finisar shares are owned by institutional investors. Comparatively, 75.8% of Cisco Systems shares are owned by institutional investors. 1.0% of Finisar shares are owned by company insiders. Comparatively, 0.1% of Cisco Systems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Finisar and Cisco Systems’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Finisar $1.45 billion 1.37 $249.34 million $2.13 8.21
Cisco Systems $48.01 billion 3.85 $9.61 billion $1.93 19.38

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

Profitability

This table compares Finisar and Cisco Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Finisar 16.92% 13.11% 8.25%
Cisco Systems 20.26% 16.64% 8.47%

Dividends

Cisco Systems pays an annual dividend of $1.16 per share and has a dividend yield of 3.1%. Finisar does not pay a dividend. Cisco Systems pays out 60.1% of its earnings in the form of a dividend.

Risk and Volatility

Finisar has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Cisco Systems has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500.

Summary

Cisco Systems beats Finisar on 10 of the 17 factors compared between the two stocks.

About Finisar

Finisar Corporation (Finisar) is a provider of optical subsystems and components that are used in data communication and telecommunication applications. The Company’s optical subsystems consist of transmitters, receivers, transceivers, transponders and active optical cables, which provide the fundamental optical-electrical or optoelectronic interface for interconnecting the electronic equipment used in these networks, including the switches, routers, and servers used in wireline networks. These products rely on the use of semiconductor lasers and photodetectors in conjunction with integrated circuits and optoelectronic packaging to provide a means for transmitting and receiving digital signals over fiber optic cable at speeds ranging from less than one gigabit per second (Gbps), to more than 100 Gbps, over distances of less than 10 meters to more than 2,000 kilometers, using a range of network protocols and physical configurations.

About Cisco Systems

Cisco Systems, Inc. designs and sells a range of products, provides services and delivers integrated solutions to develop and connect networks around the world. The Company operates through three geographic segments: Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific, Japan and China (APJC). The Company groups its products and technologies into various categories, such as Switching; Next-Generation Network (NGN) Routing; Collaboration; Data Center; Wireless; Service Provider Video; Security, and Other Products. In addition to its product offerings, the Company provides a range of service offerings, including technical support services and advanced services. The Company delivers its technology and services to its customers as solutions for their priorities, including cloud, video, mobility, security, collaboration and analytics. The Company serves customers, including businesses of all sizes, public institutions, governments and service providers.

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