Silicom (NASDAQ:SILC – Get Free Report) and ADTRAN (NASDAQ:ADTN – Get Free Report) are both small-cap technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, risk, earnings, institutional ownership, analyst recommendations, profitability and dividends.
Volatility and Risk
Silicom has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500. Comparatively, ADTRAN has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500.
Profitability
This table compares Silicom and ADTRAN’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Silicom | -12.98% | -8.37% | -6.26% |
| ADTRAN | -2.29% | 14.24% | 1.66% |
Valuation and Earnings
This table compares Silicom and ADTRAN”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Silicom | $61.93 million | 3.90 | -$11.48 million | ($1.71) | -24.58 |
| ADTRAN | $1.08 billion | 0.52 | -$45.66 million | ($0.28) | -24.58 |
Silicom has higher earnings, but lower revenue than ADTRAN. Silicom is trading at a lower price-to-earnings ratio than ADTRAN, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
52.8% of Silicom shares are owned by institutional investors. Comparatively, 80.6% of ADTRAN shares are owned by institutional investors. 25.4% of Silicom shares are owned by insiders. Comparatively, 2.2% of ADTRAN shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Analyst Ratings
This is a summary of current recommendations and price targets for Silicom and ADTRAN, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Silicom | 1 | 0 | 1 | 0 | 2.00 |
| ADTRAN | 1 | 2 | 4 | 0 | 2.43 |
Silicom currently has a consensus target price of $60.00, suggesting a potential upside of 42.75%. ADTRAN has a consensus target price of $14.67, suggesting a potential upside of 113.12%. Given ADTRAN’s stronger consensus rating and higher probable upside, analysts plainly believe ADTRAN is more favorable than Silicom.
Summary
ADTRAN beats Silicom on 10 of the 14 factors compared between the two stocks.
About Silicom
Silicom Ltd., together with its subsidiaries, designs, manufactures, markets, and supports networking and data infrastructure solutions for servers, server-based systems, and communications devices. It offers server network interface cards; and smart cards, such as smart server adapters, which include redirector and switching cards, encryption and data compression hardware acceleration cards, forward error correction acceleration and offloading cards, time synchronization cards, and field programmable gate array-based cards. The company also provides virtualized and universal customer-premises equipment; and edge devices for SD-WAN, secure access service edge, Telco dedicated routers, and NFV deployments. It serves original equipment manufacturing, cloud, telco, mobile, and related service provider markets. The company operates in the United States, North America, Israel, Europe, and the Asia Pacific. Silicom Ltd. was incorporated in 1987 and is headquartered in Kfar Saba, Israel.
About ADTRAN
ADTRAN Holdings, Inc., through its subsidiaries, provides networking and communications platforms, software, systems, and services in the United States, Germany, the United Kingdom, and internationally. It operates through two segments, Network Solutions, and Services & Support. It offers residential gateways; ethernet passive optical network ONUs; gigabit passive optical network/XGS-PON ONTs; traditional SSE, routers, and switches; edge cloud; carrier ethernet network interface devices; Optical Line Terminals; Packet Aggregation, Copper Access, and Oscilloquartz; optical transport and engine solutions; infrastructure monitoring solution; and training, professional, software, and managed services. The company also provides various software, such as Mosaic One SaaS, n-Command, Procloud, MCP, AOE and ACI-E, and Ensemble Controller. It serves large, medium, and small service providers; alternative service providers, such as utilities, municipalities and fiber overbuilders; cable/MSOs; and SMBs and distributed enterprises. ADTRAN Holdings, Inc. was incorporated in 1985 and is headquartered in Huntsville, Alabama.
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