Analyzing Viavi Solutions (NASDAQ:VIAV) and Finisar (NASDAQ:FNSR)

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

Earnings and Valuation

This table compares Viavi Solutions and Finisar’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Viavi Solutions $1.13 billion 2.78 $5.40 million $0.52 26.46
Finisar $1.28 billion 2.15 -$53.22 million $0.59 38.88

Viavi Solutions has higher earnings, but lower revenue than Finisar. Viavi Solutions 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 breakdown of recent ratings and target prices for Viavi Solutions and Finisar, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viavi Solutions 0 2 6 0 2.75
Finisar 0 11 1 0 2.08

Viavi Solutions presently has a consensus target price of $14.71, indicating a potential upside of 6.94%. Finisar has a consensus target price of $25.53, indicating a potential upside of 11.27%. Given Finisar’s higher probable upside, analysts plainly believe Finisar is more favorable than Viavi Solutions.

Profitability

This table compares Viavi Solutions and Finisar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Viavi Solutions 0.48% 16.75% 6.59%
Finisar -4.16% 4.22% 2.74%

Insider and Institutional Ownership

97.7% of Viavi Solutions shares are held by institutional investors. Comparatively, 95.4% of Finisar shares are held by institutional investors. 0.5% of Viavi Solutions shares are held by insiders. Comparatively, 1.1% of Finisar shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Viavi Solutions has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, Finisar has a beta of 1.5, suggesting that its share price is 50% more volatile than the S&P 500.

Summary

Viavi Solutions beats Finisar on 8 of the 14 factors compared between the two stocks.

About Viavi Solutions

Viavi Solutions Inc. provides network test, monitoring, and assurance solutions to communications service providers, enterprises, network equipment manufacturers, civil government, military, and avionics customers worldwide. The company operates through Network Enablement, Service Enablement, and Optical Security and Performance Products segments. The Network Enablement segment offers testing solutions that access the network to perform build-out and maintenance tasks. This segment provides solutions that include instruments, software, and services to design, build, activate, certify, troubleshoot, and optimize networks. It also offers support and professional services, such as repair, calibration, software support, and technical assistance for the products; and system integration projects, including project management, installation, and implementation, as well as product and technology training, and consulting services. The Service Enablement segment provides embedded systems and enterprise performance management solutions for communication service providers, enterprises, and cloud operators with visibility into network, service, and application data. Its solutions include instruments, microprobes, and software, which monitor, collect, and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization. The Optical Security and Performance Products segment offers optical products for anti-counterfeiting, government, industrial, automotive, and consumer electronic markets, including 3D sensing applications. The company was formerly known as JDS Uniphase Corporation and changed its name to Viavi Solutions Inc. in August 2015. Viavi Solutions Inc. was founded in 1979 and is headquartered in San Jose, California.

About Finisar

Finisar Corporation provides components and subsystems to networking equipment manufacturers, data center operators, telecom service providers, consumer electronics, and automotive companies in the United States, China, Malaysia, and internationally. The company's optical subsystems primarily include transmitters, receivers, transceivers, transponders, and active optical cables, which provide the fundamental optical-electrical or optoelectronic interface for interconnecting the electronic equipment used in wireline networks comprising switches, routers, and servers, as well as wireless networks, such as antennas and base stations. It also offers wavelength selective switches that are used to switch network traffic from one optical fiber to various other fibers without converting to an electronic signal. In addition, the company provides packaged laser, receivers, and photodetectors for data communication and telecommunication applications; and passive optical components for telecommunication applications. It markets its products through direct sales force, as well as distributors, manufacturers' representatives and resellers, and system integrators; and to the manufacturers of storage systems and telecommunication equipment, as well as to their contract manufacturers. Finisar Corporation was founded in 1987 and is headquartered in Sunnyvale, California.

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