Critical Analysis: Ribbon Communications (RBBN) and Its Competitors

Ribbon Communications (NASDAQ:RBBN) is one of 110 publicly-traded companies in the “Communications Equipment” industry, but how does it compare to its competitors? We will compare Ribbon Communications to similar businesses based on the strength of its institutional ownership, valuation, profitability, earnings, analyst recommendations, dividends and risk.

Institutional & Insider Ownership

70.9% of Ribbon Communications shares are owned by institutional investors. Comparatively, 44.4% of shares of all “Communications Equipment” companies are owned by institutional investors. 4.0% of Ribbon Communications shares are owned by company insiders. Comparatively, 18.4% of shares of all “Communications Equipment” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Ribbon Communications and its competitors revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Ribbon Communications	$844.56 million	$39.64 million	15.50
Ribbon Communications Competitors	$2.71 billion	$292.54 million	-2.75

Ribbon Communications’ competitors have higher revenue and earnings than Ribbon Communications. Ribbon Communications is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Ribbon Communications and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ribbon Communications	2.32%	20.61%	7.29%
Ribbon Communications Competitors	0.16%	-5.14%	2.95%

Volatility & Risk

Ribbon Communications has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500. Comparatively, Ribbon Communications’ competitors have a beta of 1.19, meaning that their average share price is 19% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Ribbon Communications and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ribbon Communications	1	1	4	0	2.50
Ribbon Communications Competitors	1072	4015	7065	377	2.54

Ribbon Communications presently has a consensus target price of $3.20, suggesting a potential upside of 106.45%. As a group, “Communications Equipment” companies have a potential upside of 38.17%. Given Ribbon Communications’ higher probable upside, analysts plainly believe Ribbon Communications is more favorable than its competitors.

Summary

Ribbon Communications beats its competitors on 8 of the 13 factors compared.

About Ribbon Communications

Ribbon Communications Inc. provides communications technology in the United States, Europe, the Middle East, Africa, the Asia Pacific, and internationally. It operates through two segments, Cloud and Edge, and IP Optical Networks. The Cloud and Edge segment provides software and hardware products, solutions, and services for voice over internet protocol communications, voice over long-term evolution, and voice over 5G communications, and unified communications and collaboration. It also offers session border controllers; and network transformation products, such as signaling products, call controllers, media gateways, and application servers. This segment serves private, public, or hybrid cloud infrastructures, as well as data centers, enterprise premises, and service provider networks. The IP Optical Networks segment provides hardware and software products and solutions for IP networking, switching, routing, and optical transport for technologies, such as 5G, distributed cloud computing, and corresponding applications. It also offers multiple solutions, including 5G-native solutions for mobile-backhaul, metro and edge aggregation, core networking, data center interconnect, multi-service access, and transport solutions for wholesale carriers. This segment serves utilities, government, defense, finance, transportation, and education and research industries, as well as service providers and enterprises. The company was formerly known as Sonus Networks, Inc. and changed its name to Ribbon Communications Inc. in November 2017. Ribbon Communications Inc. was founded in 1997 and is headquartered in Plano, Texas.