Acacia Communications (NASDAQ: ACIA) and Lumentum Holdings (NASDAQ:LITEV) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, risk, profitability, valuation, dividends, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Acacia Communications and Lumentum Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acacia Communications 0 3 7 0 2.70
Lumentum Holdings 1 0 0 0 1.00

Acacia Communications presently has a consensus price target of $61.88, indicating a potential upside of 25.69%. Given Acacia Communications’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Acacia Communications is more favorable than Lumentum Holdings.

Insider & Institutional Ownership

86.5% of Acacia Communications shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Acacia Communications and Lumentum Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Acacia Communications $471.30 million 4.10 $112.56 million $3.38 14.57
Lumentum Holdings N/A N/A N/A N/A N/A

Acacia Communications has higher revenue and earnings than Lumentum Holdings.

Profitability

This table compares Acacia Communications and Lumentum Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acacia Communications 29.65% 34.46% 28.99%
Lumentum Holdings -24.65% -40.72% -17.78%

Summary

Acacia Communications beats Lumentum Holdings on 8 of the 8 factors compared between the two stocks.

About Acacia Communications

Acacia Communications, Inc. provides high-speed coherent interconnect products. The Company’s products include a series of low-power coherent digital signal processor application-specific integrated circuits (DSP ASICs), and silicon photonic integrated circuits (silicon PICs), which it has integrated into families of optical interconnect modules with transmission speeds ranging from 100 to 400 gigabits per second (Gbps) for use in long-haul, metro and inter-data center markets. The Company is also developing optical interconnect modules that will enable transmission speeds of one terabit (1,000 gigabits) per second and above. The Company’s modules perform a majority of the digital signal processing and optical functions in optical interconnects. The Company’s coherent DSP ASICs are manufactured using complementary metal oxide semiconductor (CMOS), and its silicon PICs are manufactured using a CMOS-compatible process.

About Lumentum Holdings

Lumentum Holdings Inc. is a provider of optical and photonic products for a range of end market applications, including data communications (Datacom) and telecommunications (Telecom) networking and commercial lasers (commercial lasers) for manufacturing, inspection and life-science applications. The Company operates in two segments: Optical Communications (OpComms) and Commercial Lasers (Lasers). The Company’s OpComms products include a range of components, modules and subsystems to support and maintain customers in its two primary markets: Telecom and Datacom. The Company’s Lasers products serve customers in markets and applications, such as manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining, such as drilling in printed circuit boards, wafer singulation and solar cell scribing. The Company’s customers include original equipment manufacturers (OEMs).

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