Contrasting ADTRAN (NASDAQ:ADTN) & Cisco Systems (NASDAQ:CSCO)

Cisco Systems (NASDAQ:CSCO) and ADTRAN (NASDAQ:ADTN) 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.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Cisco Systems and ADTRAN, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cisco Systems	0	7	15	2	2.79
ADTRAN	2	1	4	0	2.29

Cisco Systems presently has a consensus price target of $129.43, indicating a potential upside of 16.56%. ADTRAN has a consensus price target of $14.67, indicating a potential upside of 88.76%. Given ADTRAN’s higher probable upside, analysts clearly believe ADTRAN is more favorable than Cisco Systems.

Insider & Institutional Ownership

73.3% of Cisco Systems shares are held by institutional investors. Comparatively, 80.6% of ADTRAN shares are held by institutional investors. 0.0% of Cisco Systems shares are held by insiders. Comparatively, 2.2% of ADTRAN 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.

Risk & Volatility

Cisco Systems has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, ADTRAN has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500.

Dividends

Cisco Systems pays an annual dividend of $1.68 per share and has a dividend yield of 1.5%. ADTRAN pays an annual dividend of $0.36 per share and has a dividend yield of 4.6%. Cisco Systems pays out 50.3% of its earnings in the form of a dividend. ADTRAN pays out -128.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cisco Systems has raised its dividend for 13 consecutive years. ADTRAN is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Cisco Systems and ADTRAN’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cisco Systems	20.95%	30.16%	11.69%
ADTRAN	-2.29%	14.24%	1.66%

Earnings & Valuation

This table compares Cisco Systems and ADTRAN”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cisco Systems	$63.33 billion	6.91	$13.27 billion	$3.34	33.25
ADTRAN	$1.14 billion	0.56	-$45.66 million	($0.28)	-27.75

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

Summary

Cisco Systems beats ADTRAN on 12 of the 18 factors compared between the two stocks.

About Cisco Systems

Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. The company also offers switching portfolio encompasses campus switching as well as data center switching; enterprise routing portfolio interconnects public and private wireline and mobile networks, delivering highly secure, and reliable connectivity to campus, data center and branch networks; wireless products include wireless access points and controllers; and compute portfolio including the cisco unified computing system, hyperflex, and software management capabilities, which combine computing, networking, and storage infrastructure management and virtualization. In addition, it provides Internet for the future product consists of routed optical networking, 5G, silicon, and optics solutions; collaboration products, such as meetings, collaboration devices, calling, contact center, and communication platform as a service; end-to-end security product consists of network security, cloud security, security endpoints, unified threat management, and zero trust; and optimized application experiences products including full stack observability and network assurance. Further, the company offers a range of service and support options for its customers, including technical support and advanced services and advisory services. It serves businesses of various sizes, public institutions, governments, and service providers. The company sells its products and services directly, as well as through systems integrators, service providers, other resellers, and distributors. Cisco Systems, Inc. has strategic alliances with other companies. Cisco Systems, Inc. was incorporated in 1984 and is headquartered in San Jose, California.

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.