Head-To-Head Contrast: Harmonic (HLIT) and ARRIS International (ARRS)

Harmonic (NASDAQ: HLIT) and ARRIS International (NASDAQ:ARRS) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Analyst Ratings

This is a summary of recent ratings for Harmonic and ARRIS International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Harmonic 0 2 2 0 2.50
ARRIS International 0 3 5 0 2.63

Harmonic currently has a consensus target price of $5.33, suggesting a potential upside of 33.33%. ARRIS International has a consensus target price of $33.13, suggesting a potential upside of 29.95%. Given Harmonic’s higher possible upside, analysts plainly believe Harmonic is more favorable than ARRIS International.

Earnings & Valuation

This table compares Harmonic and ARRIS International’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Harmonic $405.91 million 0.80 -$72.31 million ($1.01) -3.96
ARRIS International $6.83 billion 0.70 $18.10 million $0.87 29.30

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

Insider and Institutional Ownership

96.0% of Harmonic shares are owned by institutional investors. Comparatively, 86.5% of ARRIS International shares are owned by institutional investors. 4.3% of Harmonic shares are owned by company insiders. Comparatively, 0.9% of ARRIS International shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Harmonic and ARRIS International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Harmonic -22.02% -13.06% -6.02%
ARRIS International 2.51% 14.02% 5.89%

Risk and Volatility

Harmonic has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, ARRIS International has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500.

Summary

ARRIS International beats Harmonic on 9 of the 13 factors compared between the two stocks.

About Harmonic

Harmonic Inc. (Harmonic) designs, manufactures and sells video infrastructure products, and system solutions. The Company has two segments: Video and Cable Edge. Harmonic provides technical support and professional services to its customers around the world. The Video segment sells video processing and production, and playout solutions and services to broadcast and media companies, streaming media companies, cable operators, and satellite and telecommunications (telco), and pay television (TV) service providers. Its Cable Edge business sells cable edge solutions and related services to cable operators around the world. The Video segment offers a range of products and solutions, as well as software-based media processing platforms. The Company’s Narrowcast Services Gateway (NSG) products are integrated edge gateway products that integrate routing, multiplexing, scrambling and modulation into a single package for the delivery of narrowcast services to subscribers over cable networks.

About ARRIS International

ARRIS International plc is a media entertainment and data communications solutions provider. The Company operates in two segments: Customer Premises Equipment (CPE), and Network & Cloud (N&C). The Company enables service providers, including cable, telephone, and digital broadcast satellite operators, and media programmers to deliver media, voice and Internet Protocol (IP) data services to their subscribers. It is engaged in offering set-tops, digital video and IP television (IPTV) distribution systems, broadband access infrastructure platforms, and associated data and voice CPE, which it also sells directly to consumers through retail channels. Its solutions are complemented by an array of services, including technical support, repair and refurbishment, and system design and integration. The CPE segment consists of CPE Products-Video and CPE Products-Broadband. The N&C segment consists of Infrastructure Products, Cloud Software and Global Services.

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