Financial Review: Acacia Communications (ACIA) versus CommScope Holding Company (NASDAQ:COMM)

CommScope Holding Company (NASDAQ: COMM) and Acacia Communications (NASDAQ:ACIA) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, profitabiliy, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent ratings and recommmendations for CommScope Holding Company and Acacia Communications, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CommScope Holding Company 0 2 8 0 2.80
Acacia Communications 0 3 7 0 2.70

CommScope Holding Company presently has a consensus price target of $43.89, indicating a potential upside of 15.04%. Acacia Communications has a consensus price target of $65.50, indicating a potential upside of 54.96%. Given Acacia Communications’ higher possible upside, analysts clearly believe Acacia Communications is more favorable than CommScope Holding Company.

Insider & Institutional Ownership

97.9% of CommScope Holding Company shares are owned by institutional investors. Comparatively, 90.0% of Acacia Communications shares are owned by institutional investors. 3.3% of CommScope Holding Company shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares CommScope Holding Company and Acacia Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CommScope Holding Company $4.92 billion 1.50 $1.14 billion $1.25 30.52
Acacia Communications $508.59 million 3.21 $141.94 million $3.70 11.42

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

Volatility and Risk

CommScope Holding Company has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Acacia Communications has a beta of 3.81, suggesting that its share price is 281% more volatile than the S&P 500.

Profitability

This table compares CommScope Holding Company and Acacia Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CommScope Holding Company 4.96% 36.96% 7.03%
Acacia Communications 30.02% 43.80% 35.64%

About CommScope Holding Company

CommScope Holding Company, Inc. (CommScope) is a provider of infrastructure solutions for the core, access and edge layers of communications networks. The Company operates through two segments: CommScope Connectivity Solutions (CCS) and CommScope Mobility Solutions (CMS). Its portfolio includes wireless and fiber optic solutions. The Company’s solutions are found in the venues and outdoor spaces, including in data centers and buildings of all shapes, sizes and complexities; at wireless cell sites; in telecom central offices and cable head ends; in fiber-to-the-X (FTTX) deployments, and in airports, trains and tunnels. As of December 31, 2016, it served customers in over 100 countries through a network of more than 30 manufacturing and distribution facilities located around the globe. Its customers include global telecommunication operators and enterprise customers, including Fortune 500 enterprises and multi-system operators (MSOs).

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.

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