ADTRAN (NASDAQ: ADTN) and Lumentum Holdings (NASDAQ:LITE) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, dividends and risk.

Dividends

ADTRAN pays an annual dividend of $0.36 per share and has a dividend yield of 1.6%. Lumentum Holdings does not pay a dividend. ADTRAN pays out 43.9% of its earnings in the form of a dividend.

Risk and Volatility

ADTRAN has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500. Comparatively, Lumentum Holdings has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for ADTRAN and Lumentum Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ADTRAN 0 2 4 0 2.67
Lumentum Holdings 1 4 9 1 2.67

ADTRAN currently has a consensus price target of $24.00, indicating a potential upside of 7.38%. Lumentum Holdings has a consensus price target of $64.36, indicating a potential upside of 12.41%. Given Lumentum Holdings’ higher possible upside, analysts plainly believe Lumentum Holdings is more favorable than ADTRAN.

Earnings & Valuation

This table compares ADTRAN and Lumentum Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ADTRAN $686.83 million 1.56 $53.98 million $0.82 27.26
Lumentum Holdings $1.00 billion 3.52 $144.13 million ($1.69) -33.88

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

Institutional and Insider Ownership

89.5% of ADTRAN shares are owned by institutional investors. Comparatively, 95.7% of Lumentum Holdings shares are owned by institutional investors. 3.0% of ADTRAN shares are owned by insiders. Comparatively, 0.8% of Lumentum Holdings shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
ADTRAN 5.68% 8.39% 6.07%
Lumentum Holdings -10.25% 18.12% 9.48%

Summary

Lumentum Holdings beats ADTRAN on 12 of the 16 factors compared between the two stocks.

About ADTRAN

ADTRAN, Inc. (ADTRAN) is a provider of networking and communications equipment. The Company’s solutions enable voice, data, video and Internet communications across a range of network infrastructures. It operates through two segments: Network Solutions and Services & Support. Network Solutions includes software and hardware products that enable CSPs and enterprise customers to realize a fully connected world. It provides a full-range of network implementation, maintenance and managed services. Its solutions include Access & Aggregation, Customer Devices, and Traditional & Other Products. Its Access & Aggregation solutions are used by communications service providers (CSPs) to connect their network infrastructure to their subscribers. The portfolio of ADTRAN solutions within Access & Aggregation category includes a range of modular or fixed physical form factors designed to deliver the technology and economic fit based on the target subscriber density and environmental conditions.

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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