Financial Comparison: Meru Networks (MERU) & AT&T (T)

Meru Networks (NASDAQ: MERU) and AT&T (NYSE:T) are both telecommunications services companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, risk, earnings, valuation and analyst recommendations.

Profitability

This table compares Meru Networks and AT&T’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Meru Networks -46.15% N/A -86.56%
AT&T 8.12% 14.53% 4.43%

Valuation and Earnings

This table compares Meru Networks and AT&T’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Meru Networks N/A N/A N/A N/A N/A
AT&T $161.93 billion 1.46 $49.37 billion $2.12 18.16

AT&T has higher revenue and earnings than Meru Networks.

Dividends

AT&T pays an annual dividend of $1.96 per share and has a dividend yield of 5.1%. Meru Networks does not pay a dividend. AT&T pays out 92.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AT&T has increased its dividend for 32 consecutive years.

Insider & Institutional Ownership

55.0% of AT&T shares are held by institutional investors. 0.1% of AT&T shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Meru Networks and AT&T, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meru Networks 0 0 0 0 N/A
AT&T 0 16 10 0 2.38

AT&T has a consensus price target of $44.10, indicating a potential upside of 14.55%. Given AT&T’s higher probable upside, analysts plainly believe AT&T is more favorable than Meru Networks.

Summary

AT&T beats Meru Networks on 10 of the 11 factors compared between the two stocks.

Meru Networks Company Profile

Meru Networks, Inc. (Meru) develops and markets a virtualized Wireless Local Area Network (WLAN) solution. The Company’s solution is built around its System Director Operating System, which runs on its controllers and access points. The Company offers additional products designed to deliver network management, diagnostics and security. The Company also offers support services related to its products, professional services, and training. Its products and services are sold through value added resellers, and distributors, as well as its sales force. Its System Director Operating System forms the core of its virtualized WLAN solution. It provides a family of controllers that run its System Director Operating System and work in conjunction with its access points. Its Wireless Fidelity (Wi-Fi) certified access points provide network connectivity for wireless devices. Its bring-your-own-device (BYOD) and policy management solutions are designed to automate secure guest access.

AT&T Company Profile

AT&T Inc. is a holding company. The Company is a provider of communications and digital entertainment services in the United States and the world. The Company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility and International. The Company offers its services and products to consumers in the United States, Mexico and Latin America and to businesses and other providers of telecommunications services worldwide. It also owns and operates three regional TV sports networks, and retains non-controlling interests in another regional sports network and a network dedicated to game-related programming, as well as Internet interactive game playing. Its services and products include wireless communications, data/broadband and Internet services, digital video services, local and long-distance telephone services, telecommunications equipment, managed networking, and wholesale services. Its subsidiaries include AT&T Mobility and SKY Brasil Servicos Ltda.

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