Ribbon Communications (RBBN) versus TESSCO Technologies (TESS) Financial Analysis

TESSCO Technologies (NASDAQ: TESS) and Ribbon Communications (NASDAQ:RBBN) are both small-cap technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, risk and valuation.

Dividends

TESSCO Technologies pays an annual dividend of $0.80 per share and has a dividend yield of 3.8%. Ribbon Communications does not pay a dividend. TESSCO Technologies pays out 235.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for TESSCO Technologies and Ribbon Communications, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TESSCO Technologies 0 0 0 0 N/A
Ribbon Communications 1 1 4 0 2.50

Ribbon Communications has a consensus target price of $7.05, indicating a potential downside of 4.73%. Given Ribbon Communications’ higher possible upside, analysts plainly believe Ribbon Communications is more favorable than TESSCO Technologies.

Profitability

This table compares TESSCO Technologies and Ribbon Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TESSCO Technologies 0.51% 3.09% 1.80%
Ribbon Communications -8.82% -1.87% -1.32%

Earnings and Valuation

This table compares TESSCO Technologies and Ribbon Communications’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TESSCO Technologies $533.29 million 0.33 $1.44 million $0.34 62.50
Ribbon Communications $252.59 million 3.00 -$13.93 million ($0.44) -16.82

TESSCO Technologies has higher revenue and earnings than Ribbon Communications. Ribbon Communications is trading at a lower price-to-earnings ratio than TESSCO Technologies, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

TESSCO Technologies has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, Ribbon Communications has a beta of 2.08, meaning that its stock price is 108% more volatile than the S&P 500.

Insider and Institutional Ownership

58.3% of TESSCO Technologies shares are owned by institutional investors. Comparatively, 32.3% of Ribbon Communications shares are owned by institutional investors. 26.9% of TESSCO Technologies shares are owned by insiders. Comparatively, 7.7% of Ribbon Communications shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

TESSCO Technologies beats Ribbon Communications on 10 of the 15 factors compared between the two stocks.

About TESSCO Technologies

TESSCO Technologies Incorporated architects and delivers the product and value chain solutions to organizations responsible for building, operating, maintaining and reselling cellular, mobile communications, wireless-fidelity (Wi-Fi), machine-to-machine, Internet of Things and wireless backhaul systems. The Company provides marketing and sales services, knowledge and supply chain management, product-solution delivery and control systems utilizing Internet and information technology. Its customers include a diversified mix of carrier and public network operators, tower owners, program managers, contractors and integrators, wireless Internet service providers, industrial and enterprise self-maintained users (including railroads, utilities, mining operators, oil and gas operators and technicians), governments, manufacturers, value-added resellers, tier 1, 2 and 3 retail carrier stores and their independent agents, dealers and consumers, as well as other local and national retailers.

About Ribbon Communications

Sonus Networks, Inc., formerly Solstice Sapphire Investments, Inc., is a provider of networked solutions for communications service providers and enterprises to help them secure and unify their real-time communications infrastructures. The Company helps communications service providers and enterprises hold the session initiation protocol (SIP) and fourth generation (4G)/long term evolution (LTE)-based solutions, including voice over Internet protocol (VoIP), voice over wireless fidelity (VoWiFi), video and unified communications (UC) by securing and enabling Internet Protocol (IP) networks. Its products include session border controllers (SBCs), diameter signaling controllers (DSCs) and VoWiFi solutions. Sonus Products include Sonus GSX9000 Open Services Switch, Sonus T7000 Intelligent Switching System, Sonus Diameter Signaling Controllers, Sonus Signal Transfer Points, Sonus PSX Policy & Routing Server, Sonus WebRTC Services Solution, and Sonus Network Management Solutions.

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