Brocade Communications Systems (NASDAQ: BRCD) is one of 70 public companies in the “Communications & Networking” industry, but how does it weigh in compared to its peers? We will compare Brocade Communications Systems to similar businesses based on the strength of its risk, dividends, earnings, profitability, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Brocade Communications Systems and its peers’ 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%
Brocade Communications Systems Competitors -2.33% -5.94% 0.30%

Insider and Institutional Ownership

83.6% of Brocade Communications Systems shares are held by institutional investors. Comparatively, 62.9% of shares of all “Communications & Networking” companies are held by institutional investors. 1.8% of Brocade Communications Systems shares are held by company insiders. Comparatively, 13.2% of shares of all “Communications & Networking” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Brocade Communications Systems and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brocade Communications Systems 1 3 0 0 1.75
Brocade Communications Systems Competitors 383 2512 4041 161 2.56

Brocade Communications Systems presently has a consensus target price of $12.83, suggesting a potential upside of 4.76%. As a group, “Communications & Networking” companies have a potential upside of 21.43%. Given Brocade Communications Systems’ peers stronger consensus rating and higher probable upside, analysts clearly believe Brocade Communications Systems has less favorable growth aspects than its peers.

Dividends

Brocade Communications Systems pays an annual dividend of $0.22 per share and has a dividend yield of 1.8%. 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. As a group, “Communications & Networking” companies pay a dividend yield of 1.9% and pay out 48.7% of their earnings in the form of a dividend. Brocade Communications Systems lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Valuation & Earnings

This table compares Brocade Communications Systems and its peers revenue, earnings per share (EPS) and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Brocade Communications Systems $2.35 billion $213.81 million 175.00
Brocade Communications Systems Competitors $3.30 billion $420.04 million -12.55

Brocade Communications Systems’ peers have higher revenue and earnings than Brocade Communications Systems. Brocade Communications Systems is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

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, Brocade Communications Systems’ peers have a beta of 1.14, suggesting that their average stock price is 14% more volatile than the S&P 500.

Summary

Brocade Communications Systems peers beat Brocade Communications Systems on 10 of the 15 factors compared.

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.

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