Head-To-Head Analysis: Calix (NYSE:CALX) vs. Brocade Communications Systems (BRCD)

Brocade Communications Systems (NASDAQ: BRCD) and Calix (NYSE:CALX) are both technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Dividends

Brocade Communications Systems pays an annual dividend of $0.22 per share and has a dividend yield of 1.7%. Calix does not pay a dividend. 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.

Risk & Volatility

Brocade Communications Systems has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, Calix has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Brocade Communications Systems and Calix, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brocade Communications Systems 1 3 0 0 1.75
Calix 0 2 0 0 2.00

Brocade Communications Systems presently has a consensus price target of $12.83, indicating a potential upside of 1.13%. Calix has a consensus price target of $6.50, indicating a potential upside of 1.56%. Given Calix’s stronger consensus rating and higher probable upside, analysts clearly believe Calix is more favorable than Brocade Communications Systems.

Earnings & Valuation

This table compares Brocade Communications Systems and Calix’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Brocade Communications Systems $2.35 billion 2.24 $213.81 million $0.07 181.29
Calix $458.79 million 0.70 -$27.40 million ($1.63) -3.93

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

Profitability

This table compares Brocade Communications Systems and Calix’s 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%
Calix -16.19% -43.76% -22.97%

Insider & Institutional Ownership

83.7% of Brocade Communications Systems shares are held by institutional investors. Comparatively, 67.1% of Calix shares are held by institutional investors. 1.8% of Brocade Communications Systems shares are held by insiders. Comparatively, 16.5% of Calix 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.

Summary

Brocade Communications Systems beats Calix on 9 of the 14 factors compared between the two stocks.

About Brocade Communications Systems

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.

About Calix

Calix, Inc. provides broadband communications access systems and software for fiber- and copper-based network architectures that enable communications service providers (CSPs), to transform their networks and connect to their residential and business subscribers. The Company enables CSPs to provide various services, from basic voice and data to advanced broadband services, over legacy and next-generation access networks. It develops and sells carrier-class hardware and cloud products. Its portfolio consists of three core systems and/or nodes: E-Series access systems and nodes (E-Series systems and nodes), B6 access nodes (B-Series nodes), and the C7 multiservice, multiprotocol access system (C-Series system). These systems and nodes are complemented by the P-Series optical network terminals and residential gateways, the GigaFamily of GigaCenters, GigaHubs, and GigaPoints, the Calix Management System, OpenLink Cable software and Compass Cloud family of software-as-a-service products.

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