Financial Review: Cisco Systems (CSCO) vs. Emulex (ELX)

Cisco Systems (NASDAQ: CSCO) and Emulex (NYSE:ELX) are both communications & networking – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Cisco Systems 20.26% 16.64% 8.47%
Emulex -61.34% -54.64% -34.34%

Institutional and Insider Ownership

75.6% of Cisco Systems shares are held by institutional investors. 0.1% of Cisco Systems shares are held 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.

Dividends

Cisco Systems pays an annual dividend of $1.16 per share and has a dividend yield of 2.8%. Emulex does not pay a dividend. Cisco Systems pays out 60.1% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Cisco Systems and Emulex’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cisco Systems $48.01 billion 4.25 $9.61 billion $1.93 21.39
Emulex N/A N/A N/A ($0.96) -8.32

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

Analyst Ratings

This is a summary of current recommendations and price targets for Cisco Systems and Emulex, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cisco Systems 0 11 20 0 2.65
Emulex 0 0 0 0 N/A

Cisco Systems currently has a consensus target price of $38.56, suggesting a potential downside of 6.62%. Given Cisco Systems’ higher possible upside, research analysts clearly believe Cisco Systems is more favorable than Emulex.

Summary

Cisco Systems beats Emulex on 11 of the 12 factors compared between the two stocks.

About Cisco Systems

Cisco Systems, Inc. designs and sells a range of products, provides services and delivers integrated solutions to develop and connect networks around the world. The Company operates through three geographic segments: Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific, Japan and China (APJC). The Company groups its products and technologies into various categories, such as Switching; Next-Generation Network (NGN) Routing; Collaboration; Data Center; Wireless; Service Provider Video; Security, and Other Products. In addition to its product offerings, the Company provides a range of service offerings, including technical support services and advanced services. The Company delivers its technology and services to its customers as solutions for their priorities, including cloud, video, mobility, security, collaboration and analytics. The Company serves customers, including businesses of all sizes, public institutions, governments and service providers.

About Emulex

Emulex Corporation (Emulex) is a provider of network connectivity, monitoring and management products. It provides solutions for networks that support enterprise, cloud, government and telecommunications sectors. The Company’s portfolio of input/output (I/O) connectivity offerings, including the line of Ethernet and Fiber Channel-based connectivity products, has been designed into server and storage solutions. Its monitoring and management solutions include its network visibility and recording products. The Company’s network connectivity, monitoring and management solutions are offered through two business segments: Connectivity Segment and the Visibility Segment. The Connectivity Segment comprises the Company’s Emulex products, and network connectivity products (NCP) and storage connectivity and other products (SCOP). Its Visibility Segment comprises its Network Visibility Products (NVP).

Receive News & Ratings for Cisco Systems Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Cisco Systems and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply