Finisar (FNSR) versus Tellabs (TLAB) Critical Analysis

Finisar (NASDAQ: FNSR) and Tellabs (NASDAQ:TLAB) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Finisar 16.92% 13.11% 8.25%
Tellabs N/A N/A N/A

Institutional and Insider Ownership

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

Valuation & Earnings

This table compares Finisar and Tellabs’ gross revenue, earnings per share (EPS) 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
Tellabs N/A N/A N/A ($0.27) N/A

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Finisar and Tellabs, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Finisar 0 3 9 2 2.93
Tellabs 0 0 0 0 N/A

Finisar presently has a consensus price target of $30.12, indicating a potential upside of 72.28%.

Summary

Finisar beats Tellabs on 9 of the 9 factors compared between the two stocks.

Finisar Company Profile

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.

Tellabs Company Profile

Tellabs, Inc. is engaged in designing and marketing equipment and services to communications-services providers worldwide. The company operates in four segments: optical, data, access and services. Its products and services, in combination with its Tellabs 8000 Intelligent Network Manager, enables its customers to deliver wireless and wireline voice, data and video services to business and residential customers. It sells its products domestically and internationally through its field sales force and distributors/partners. In December 2013, Marlin Equity Partners LLC, through its Blackhawk Merger Sub Inc wholly-owned subsidiary, acquired the entire share capital of Tellabs Inc.

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