Analyzing Harmonic (NASDAQ:HLIT) and AudioCodes (NASDAQ:AUDC)

Harmonic (NASDAQ:HLIT) and AudioCodes (NASDAQ:AUDC) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Earnings and Valuation

This table compares Harmonic and AudioCodes”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harmonic	$678.72 million	1.61	$39.22 million	$0.59	16.31
AudioCodes	$242.18 million	1.13	$15.31 million	$0.45	21.42

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

Profitability

This table compares Harmonic and AudioCodes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harmonic	9.96%	17.83%	10.23%
AudioCodes	5.66%	9.65%	5.45%

Insider and Institutional Ownership

99.4% of Harmonic shares are owned by institutional investors. Comparatively, 68.1% of AudioCodes shares are owned by institutional investors. 1.2% of Harmonic shares are owned by insiders. Comparatively, 48.8% of AudioCodes shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Harmonic and AudioCodes, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harmonic	1	2	4	0	2.43
AudioCodes	1	0	1	0	2.00

Harmonic presently has a consensus target price of $11.67, suggesting a potential upside of 21.28%. AudioCodes has a consensus target price of $11.25, suggesting a potential upside of 16.70%. Given Harmonic’s stronger consensus rating and higher probable upside, equities analysts clearly believe Harmonic is more favorable than AudioCodes.

Volatility & Risk

Harmonic has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500. Comparatively, AudioCodes has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.

Summary

Harmonic beats AudioCodes on 12 of the 14 factors compared between the two stocks.

About Harmonic

Harmonic Inc., together with its subsidiaries, provides broadband solutions worldwide. The company operates through Broadband and Video segments. The Broadband segment sells broadband access solutions and related services, including cOS software-based broadband access solutions to broadband operators; and cOS central cloud services, a subscription service for cOS customers. The Video segment sells video processing, production, and playout solutions and services to cable operators, and satellite and telco Pay-TV service providers, as well as to broadcast and media, including streaming media companies. Its video processing appliance solutions include network management and application software, and hardware products, such as encoders, video servers, high-density stream processing systems, and edge processors. This segment also provides VOS360 SaaS platform that provides both streaming and channel origination and distribution services; and software-as-a-service (SaaS) solutions, which enables the packaging and delivery of streaming services, including live streaming, VOD, catch-up TV, start-over TV, network-DVR and cloud-DVR services through HTTP streaming to various device along with dynamic and personal ad insertion. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, integration services, program management, technical design and planning, building and site preparation, integration and equipment installation, end-to-end system testing, and training, as well as SaaS-related support and deployment. It sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was incorporated in 1988 and is headquartered in San Jose, California.

About AudioCodes

AudioCodes Ltd. provides advanced communications software, products, and productivity solutions for the digital workplace worldwide. The company offers solutions, products, and services for unified communications, contact centers, hosted business services, Voice.AI, and service provider businesses. Its products include session border controllers, life cycle management solutions, VoIP network routing solutions, media gateways and servers, multi-service business routers, IP phones solutions, and value-added applications, as well as professional services. The company also offers One Voice Operations Center, a voice network management solution; Device Manager for administering business phones and meeting room solutions; AudioCodes Routing Manager for handling call routing in VoIP networks; and User Management Pack 365 simplifies user lifecycle and identity management across Microsoft Teams and Skype for Business deployments. In addition, it provides AudioCodes Live for Microsoft Teams, a portfolio of managed services for simplifying Teams adoption; appliances for Microsoft Skype/Teams for Business, such as survivable branch appliances, CCE, and CloudBond 365; and a range of value-added voice applications comprising SmartTAP, Voca, VoiceAI Connect, and Meeting Insights. Further, the company offers managed services; and AudioCodes Live Platform is a SaaS solution that enables service providers to offer their business customers a seamless migration to uCaaS solutions, such as Microsoft Teams and Zoom Phone. It primarily markets and sells its products through a direct sales force and sales representatives to original equipment manufacturers, network equipment providers, and systems integrators, enterprises, carriers, and distributors in the telecommunications and networking industries. AudioCodes Ltd. was incorporated in 1992 and is headquartered in Lod, Israel.