Emulex (NYSE: ELX) and QUALCOMM (NASDAQ:QCOM) are both technology companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Profitability

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

Net Margins Return on Equity Return on Assets
Emulex -61.34% -54.64% -34.34%
QUALCOMM 17.26% 19.64% 10.95%

Insider & Institutional Ownership

77.0% of QUALCOMM shares are held by institutional investors. 0.2% of QUALCOMM shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

QUALCOMM pays an annual dividend of $2.28 per share and has a dividend yield of 4.4%. Emulex 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 raised its dividend for 6 consecutive years.

Earnings & Valuation

This table compares Emulex and QUALCOMM’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Emulex N/A N/A N/A N/A N/A
QUALCOMM $22.57 billion 3.37 $7.15 billion $2.61 19.72

QUALCOMM has higher revenue and earnings than Emulex.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Emulex and QUALCOMM, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emulex 0 0 0 0 N/A
QUALCOMM 1 17 10 0 2.32

QUALCOMM has a consensus target price of $64.27, indicating a potential upside of 24.87%. Given QUALCOMM’s higher possible upside, analysts clearly believe QUALCOMM is more favorable than Emulex.

Summary

QUALCOMM beats Emulex on 10 of the 11 factors compared between the two stocks.

About Emulex

Emulex Corporation (Emulex) is a provider of network connectivity, monitoring and management products. It provides solutions for networks that support enterprise, cloud, government and telecommunications sectors. The Company’s portfolio of input/output (I/O) connectivity offerings, including the line of Ethernet and Fiber Channel-based connectivity products, has been designed into server and storage solutions. Its monitoring and management solutions include its network visibility and recording products. The Company’s network connectivity, monitoring and management solutions are offered through two business segments: Connectivity Segment and the Visibility Segment. The Connectivity Segment comprises the Company’s Emulex products, and network connectivity products (NCP) and storage connectivity and other products (SCOP). Its Visibility Segment comprises its Network Visibility Products (NVP).

About QUALCOMM

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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