Arista Networks (NYSE: ANET) and Polycom (NASDAQ:PLCM) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.

Valuation and Earnings

This table compares Arista Networks and Polycom’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arista Networks $1.36 billion 10.19 $350.69 million $3.85 49.62
Polycom N/A N/A N/A $0.16 77.94

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

Volatility and Risk

Arista Networks has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500. Comparatively, Polycom has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Arista Networks and Polycom, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arista Networks 0 12 18 0 2.60
Polycom 0 0 0 0 N/A

Arista Networks currently has a consensus target price of $162.73, indicating a potential downside of 14.82%. Given Arista Networks’ higher possible upside, research analysts plainly believe Arista Networks is more favorable than Polycom.

Profitability

This table compares Arista Networks and Polycom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arista Networks 21.74% 22.64% 14.49%
Polycom -3.47% -3.73% -2.23%

Institutional and Insider Ownership

59.3% of Arista Networks shares are held by institutional investors. Comparatively, 92.4% of Polycom shares are held by institutional investors. 28.1% of Arista Networks shares are held by company insiders. Comparatively, 0.7% of Polycom shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Arista Networks beats Polycom on 8 of the 10 factors compared between the two stocks.

Arista Networks Company Profile

Arista Networks, Inc. is a supplier of cloud networking solutions that use software innovations to address the needs of Internet companies, cloud service providers and data centers for enterprise support. It develops, markets and sells cloud networking solutions, which consist of its Gigabit Ethernet switches and related software. The Company’s cloud networking solutions consist of its Extensible Operating System (EOS), a set of network applications and its Ethernet switching and routing platforms. The programmability of EOS has allowed it to create a set of software applications that address the requirements of cloud networking, including workflow automation, network visibility and analytics, and has also allowed it to integrate with a range of third-party applications for virtualization, management, automation, orchestration and network services. EOS supports cloud and virtualization solutions, including VMware NSX, Microsoft System Center and other cloud management frameworks.

Polycom Company Profile

Polycom, Inc. (Polycom) offers solutions for voice, video and content sharing and a line of support and service solutions. The Company operates in Americas; Europe, Middle East and Africa (EMEA), and Asia Pacific (APAC) geographic segments. The Company’s video, voice and content-management and content-sharing solutions include applications for mobile devices, browser-based video collaboration, cloud-delivered services, conference room systems and home/work office solutions and immersive telepresence. It offers various products and solutions, which include UC Group Systems, UC Platform and UC Personal Devices. UC Group Systems includes group video, group voice and immersive telepresence systems. UC Platform includes universal collaboration servers, virtualization management, resource management, recording and streaming, and remote access technologies that constitute the RealPresence Platform. UC Personal Devices includes group video, group voice and immersive telepresence systems.

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