Financial Review: Alcatel Lucent (ALU) versus CommScope (COMM)

Alcatel Lucent (NYSE: ALU) and CommScope (NASDAQ:COMM) are both mid-cap technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Institutional and Insider Ownership

98.3% of CommScope shares are held by institutional investors. 3.3% of CommScope shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Alcatel Lucent and CommScope’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Alcatel Lucent N/A N/A N/A $0.08 43.25
CommScope $4.92 billion 1.37 $222.83 million $0.99 35.79

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Alcatel Lucent and CommScope, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alcatel Lucent 0 0 0 0 N/A
CommScope 0 5 7 0 2.58

CommScope has a consensus target price of $40.78, indicating a potential upside of 15.09%. Given CommScope’s higher possible upside, analysts clearly believe CommScope is more favorable than Alcatel Lucent.

Volatility and Risk

Alcatel Lucent has a beta of 2.05, suggesting that its stock price is 105% more volatile than the S&P 500. Comparatively, CommScope has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Profitability

This table compares Alcatel Lucent and CommScope’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alcatel Lucent 14.83% 86.14% 10.96%
CommScope 4.21% 29.11% 5.97%

Summary

CommScope beats Alcatel Lucent on 6 of the 10 factors compared between the two stocks.

About Alcatel Lucent

Alcatel Lucent SA is a provider of Internet protocol (IP) networking, ultra-broadband access and cloud technology solutions. The Company operates through two segments for the networks business. The Ultra Broadband Networks segment consists of Mobile Networks and Fixed Networks business groups. The IP Networks and Applications segment consists of Internet protocol (IP)/Optical Networks and Applications and Analytics business groups. Its other segment consists of businesses run as separate operations (Alcatel Submarine Networks and Radio Frequency Systems (RFS)). The Company offers a range of solutions, including Communications and collaboration, IP Core Routing, IP/optical integration, long term evolution (LTE) Ultra-Broadband, Software-defined networking and Vplus. The Company offers a range of consulting, managed, maintenance and professional services, including Bell Labs Consulting and Build, Operate and Manage (BOM) Solution for Mobility Networks. The main shareholder is Nokia.

About CommScope

CommScope Holding Company, Inc. (CommScope) is a provider of infrastructure solutions for the core, access and edge layers of communications networks. The Company operates through two segments: CommScope Connectivity Solutions (CCS) and CommScope Mobility Solutions (CMS). Its portfolio includes wireless and fiber optic solutions. The Company’s solutions are found in the venues and outdoor spaces, including in data centers and buildings of all shapes, sizes and complexities; at wireless cell sites; in telecom central offices and cable head ends; in fiber-to-the-X (FTTX) deployments, and in airports, trains and tunnels. As of December 31, 2016, it served customers in over 100 countries through a network of more than 30 manufacturing and distribution facilities located around the globe. Its customers include global telecommunication operators and enterprise customers, including Fortune 500 enterprises and multi-system operators (MSOs).

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