Finisar Corporation (NASDAQ: FNSR) and QUALCOMM (NASDAQ:QCOM) are both mid-cap computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, institutional ownership, analyst recommendations and risk.

Profitability

This table compares Finisar Corporation and QUALCOMM’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Finisar Corporation 16.92% 13.11% 8.25%
QUALCOMM 16.11% 11.09% 5.76%

Valuation & Earnings

This table compares Finisar Corporation and QUALCOMM’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Finisar Corporation $1.45 billion 1.81 $274.41 million $2.13 10.81
QUALCOMM $22.57 billion 3.40 $7.15 billion $2.61 19.93

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Finisar Corporation and QUALCOMM, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Finisar Corporation 0 1 10 3 3.14
QUALCOMM 1 15 10 0 2.35

Finisar Corporation currently has a consensus price target of $32.79, suggesting a potential upside of 42.37%. QUALCOMM has a consensus price target of $64.34, suggesting a potential upside of 23.68%. Given Finisar Corporation’s stronger consensus rating and higher possible upside, research analysts plainly believe Finisar Corporation is more favorable than QUALCOMM.

Institutional and Insider Ownership

86.3% of Finisar Corporation shares are owned by institutional investors. Comparatively, 76.9% of QUALCOMM shares are owned by institutional investors. 1.0% of Finisar Corporation shares are owned by company insiders. Comparatively, 0.2% of QUALCOMM shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Finisar Corporation has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, QUALCOMM has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500.

Dividends

QUALCOMM pays an annual dividend of $2.28 per share and has a dividend yield of 4.4%. Finisar Corporation does not pay a dividend. QUALCOMM pays out 87.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. QUALCOMM has increased its dividend for 6 consecutive years.

Summary

Finisar Corporation beats QUALCOMM on 10 of the 17 factors compared between the two stocks.

Finisar Corporation Company Profile

Finisar Corporation (Finisar) is a provider of optical subsystems and components that are used in data communication and telecommunication applications. The Company’s optical subsystems consist of transmitters, receivers, transceivers, transponders and active optical cables, which provide the fundamental optical-electrical or optoelectronic interface for interconnecting the electronic equipment used in these networks, including the switches, routers, and servers used in wireline networks. These products rely on the use of semiconductor lasers and photodetectors in conjunction with integrated circuits and optoelectronic packaging to provide a means for transmitting and receiving digital signals over fiber optic cable at speeds ranging from less than one gigabit per second (Gbps), to more than 100 Gbps, over distances of less than 10 meters to more than 2,000 kilometers, using a range of network protocols and physical configurations.

QUALCOMM Company Profile

QUALCOMM Incorporated is engaged in the development and commercialization of a digital communication technology called code division multiple access (CDMA). The Company is engaged in the development and commercialization of the orthogonal frequency division multiple access (OFDMA) family of technologies, including long-term evolution (LTE), which is an Orthogonal Frequency Division Multiplexing (OFDM)-based standard that uses OFDMA and single-carrier Frequency Division Multiple Access (FDMA), for cellular wireless communication applications. The Company’s segments include QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QSI (Qualcomm Strategic Initiatives). The Company also develops and commercializes a range of other technologies used in handsets and tablets that contribute to end user demand. The Company’s products principally consist of integrated circuits (chips or chipsets) and system software used in mobile devices and in wireless networks.

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