Ooma (NYSE: OOMA) and Communications Systems (NASDAQ:JCS) are both small-cap technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitability.

Dividends

Communications Systems pays an annual dividend of $0.16 per share and has a dividend yield of 4.4%. Ooma does not pay a dividend. Communications Systems pays out -11.9% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Ooma and Communications Systems’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ooma $104.52 million 1.70 -$12.94 million ($0.70) -13.93
Communications Systems $99.35 million 0.33 -$8.11 million ($1.34) -2.69

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

Profitability

This table compares Ooma and Communications Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ooma -11.48% -30.96% -16.79%
Communications Systems -13.91% -20.94% -17.56%

Institutional & Insider Ownership

75.6% of Ooma shares are owned by institutional investors. Comparatively, 32.1% of Communications Systems shares are owned by institutional investors. 11.4% of Ooma shares are owned by insiders. Comparatively, 19.5% of Communications Systems shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ooma and Communications Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ooma 1 2 2 0 2.20
Communications Systems 0 0 1 0 3.00

Ooma currently has a consensus target price of $11.92, indicating a potential upside of 22.22%. Communications Systems has a consensus target price of $6.00, indicating a potential upside of 66.67%. Given Communications Systems’ stronger consensus rating and higher probable upside, analysts clearly believe Communications Systems is more favorable than Ooma.

About Ooma

Ooma, Inc. is a United States-based company, which offers Ooma, a communications platform for small businesses and consumers. Ooma serves as a communications hub, which offers cloud-based telephony, Internet security, home monitoring and other connected services. Ooma combines PureVoice high definition (HD) call quality features with mobile applications anytime, anywhere calling. Ooma is a full router capable of prioritizing voice data and directing traffic to ensure reliable phone service. Its enterprise-grade phone service built for small business includes features, such as calling features, including unlimited calling in United States and Canada, 911 service and toll-free numbers available; office features, including virtual receptionist, extension dialing and voicemail; mobility features, including call forwarding, voicemail forwarding and multi-ring, and one-touch Internet protocol (IP) phone features, including three way conference, transfer calls and call on hold.

About Communications Systems

Communications Systems, Inc. (CSI) operates directly and through its subsidiaries located in the United States, Costa Rica and the United Kingdom. The Company operates through three segments: Suttle, Transition Networks and JDL Technologies (JDL). The Company provides physical connectivity infrastructure products and services for global deployments of broadband networks. The Company is principally engaged through its subsidiary and business unit, Suttle, Inc., in the manufacture and sale of connectivity infrastructure products for broadband and voice communications, and through its another subsidiary and business unit, Transition Networks, Inc., in the manufacture and sale of core media conversion products for broadband networks. Through its JDL Technologies, Inc. subsidiary and business unit, CSI provides information technology (IT) solutions, including network design, computer infrastructure installations, IT service management, network security and network operation services.

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