Communications Systems (NASDAQ: JCS) and Acacia Communications (NASDAQ:ACIA) are both small-cap computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.
Institutional & Insider Ownership
31.8% of Communications Systems shares are held by institutional investors. Comparatively, 81.9% of Acacia Communications shares are held by institutional investors. 17.5% of Communications Systems shares are held by company insiders. Comparatively, 37.1% of Acacia Communications shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Communications Systems pays an annual dividend of $0.16 per share and has a dividend yield of 3.8%. Acacia Communications does not pay a dividend. Communications Systems pays out -16.3% of its earnings in the form of a dividend.
This table compares Communications Systems and Acacia Communications’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings and price targets for Communications Systems and Acacia Communications, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Communications Systems currently has a consensus price target of $6.00, indicating a potential upside of 42.86%. Acacia Communications has a consensus price target of $52.14, indicating a potential upside of 12.79%. Given Communications Systems’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Communications Systems is more favorable than Acacia Communications.
Volatility and Risk
Communications Systems has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500. Comparatively, Acacia Communications has a beta of 3.48, suggesting that its share price is 248% more volatile than the S&P 500.
Earnings and Valuation
This table compares Communications Systems and Acacia Communications’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Communications Systems||$91.24 million||0.41||-$1.87 million||($0.98)||-4.29|
|Acacia Communications||$471.30 million||3.85||$112.56 million||$3.38||13.68|
Acacia Communications has higher revenue and earnings than Communications Systems. Communications Systems is trading at a lower price-to-earnings ratio than Acacia Communications, indicating that it is currently the more affordable of the two stocks.
Acacia Communications beats Communications Systems on 11 of the 15 factors compared between the two stocks.
About Communications Systems
Communications Systems, Inc. (CSI) operates directly and through its subsidiaries located in the United States, Costa Rica and the United Kingdom. The Company operates through three segments: Suttle, Transition Networks and JDL Technologies (JDL). The Company provides physical connectivity infrastructure products and services for global deployments of broadband networks. The Company is principally engaged through its subsidiary and business unit, Suttle, Inc., in the manufacture and sale of connectivity infrastructure products for broadband and voice communications, and through its another subsidiary and business unit, Transition Networks, Inc., in the manufacture and sale of core media conversion products for broadband networks. Through its JDL Technologies, Inc. subsidiary and business unit, CSI provides information technology (IT) solutions, including network design, computer infrastructure installations, IT service management, network security and network operation services.
About Acacia Communications
Acacia Communications, Inc. provides high-speed coherent interconnect products. The Company’s products include a series of low-power coherent digital signal processor application-specific integrated circuits (DSP ASICs), and silicon photonic integrated circuits (silicon PICs), which it has integrated into families of optical interconnect modules with transmission speeds ranging from 100 to 400 gigabits per second (Gbps) for use in long-haul, metro and inter-data center markets. The Company is also developing optical interconnect modules that will enable transmission speeds of one terabit (1,000 gigabits) per second and above. The Company’s modules perform a majority of the digital signal processing and optical functions in optical interconnects. The Company’s coherent DSP ASICs are manufactured using complementary metal oxide semiconductor (CMOS), and its silicon PICs are manufactured using a CMOS-compatible process.
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