Analyzing Brocade Communications Systems (NASDAQ:BRCD) and Its Competitors

Brocade Communications Systems (NASDAQ: BRCD) is one of 65 publicly-traded companies in the “Communications & Networking” industry, but how does it compare to its rivals? We will compare Brocade Communications Systems to similar companies based on the strength of its analyst recommendations, institutional ownership, dividends, valuation, earnings, profitability and risk.

Dividends

Brocade Communications Systems pays an annual dividend of $0.22 per share and has a dividend yield of 1.7%. Brocade Communications Systems pays out 314.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Communications & Networking” companies pay a dividend yield of 1.9% and pay out 47.9% of their earnings in the form of a dividend. Brocade Communications Systems lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Risk and Volatility

Brocade Communications Systems has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, Brocade Communications Systems’ rivals have a beta of 1.13, suggesting that their average share price is 13% more volatile than the S&P 500.

Insider and Institutional Ownership

83.2% of Brocade Communications Systems shares are held by institutional investors. Comparatively, 62.9% of shares of all “Communications & Networking” companies are held by institutional investors. 1.8% of Brocade Communications Systems shares are held by company insiders. Comparatively, 13.2% of shares of all “Communications & Networking” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Brocade Communications Systems and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brocade Communications Systems 1.30% 5.42% 2.84%
Brocade Communications Systems Competitors -2.05% -7.13% -0.25%

Valuation & Earnings

This table compares Brocade Communications Systems and its rivals top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Brocade Communications Systems $2.35 billion $213.81 million 180.29
Brocade Communications Systems Competitors $3.30 billion $346.42 million -2.73

Brocade Communications Systems’ rivals have higher revenue and earnings than Brocade Communications Systems. Brocade Communications Systems is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Analyst Recommendations

This is a summary of recent recommendations for Brocade Communications Systems and its rivals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brocade Communications Systems 1 3 0 0 1.75
Brocade Communications Systems Competitors 365 2217 3835 157 2.58

Brocade Communications Systems presently has a consensus target price of $12.83, indicating a potential upside of 1.69%. As a group, “Communications & Networking” companies have a potential upside of 14.35%. Given Brocade Communications Systems’ rivals stronger consensus rating and higher probable upside, analysts plainly believe Brocade Communications Systems has less favorable growth aspects than its rivals.

Summary

Brocade Communications Systems rivals beat Brocade Communications Systems on 10 of the 15 factors compared.

Brocade Communications Systems Company Profile

Brocade Communications Systems, Inc. (Brocade) is a supplier of networking hardware, software and services, including storage area networking (SAN) solutions and Internet protocol (IP) networking solutions for businesses and organizations of various types and sizes. The Company operates through three segments: SAN Products, IP Networking Products and Global Services. The SAN Products segment includes infrastructure products and solutions that help customers develop and deploy storage and server consolidation, disaster recovery and data security. The IP Networking Products segment includes Layer 2 and Layer 3 Ethernet switches, and routers to connect users over private and public networks. The Global Services segment includes break or fix maintenance, installation, consulting, network management and software maintenance, and post-contract customer support. Its products enable customers to deploy architectures and technologies, including virtualization and cloud computing.

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