Reviewing DragonWave (DRWI) & Ceragon Networks (CRNT)

DragonWave (NASDAQ: DRWI) and Ceragon Networks (NASDAQ:CRNT) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitabiliy, analyst recommendations, risk, dividends, earnings and valuation.

Insider & Institutional Ownership

14.7% of DragonWave shares are held by institutional investors. Comparatively, 21.7% of Ceragon Networks shares are held by institutional investors. 19.0% of Ceragon Networks shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for DragonWave and Ceragon Networks, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DragonWave 1 1 2 0 2.25
Ceragon Networks 0 3 0 0 2.00

DragonWave currently has a consensus price target of $2.77, indicating a potential upside of 241.55%. Ceragon Networks has a consensus price target of $3.00, indicating a potential upside of 15.38%. Given DragonWave’s stronger consensus rating and higher probable upside, equities research analysts clearly believe DragonWave is more favorable than Ceragon Networks.

Profitability

This table compares DragonWave and Ceragon Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DragonWave -36.47% -2,435.89% -34.49%
Ceragon Networks -0.17% -0.44% -0.21%

Valuation and Earnings

This table compares DragonWave and Ceragon Networks’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DragonWave $43.92 million 0.16 -$14.69 million ($3.51) -0.23
Ceragon Networks $309.83 million 0.65 $28.37 million $0.14 18.57

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

Volatility and Risk

DragonWave has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, Ceragon Networks has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Summary

Ceragon Networks beats DragonWave on 9 of the 13 factors compared between the two stocks.

DragonWave Company Profile

DragonWave Inc (DragonWave) is a provider of packet microwave solutions for Internet protocol (IP) networks. The Company operates through broadband wireless backhaul equipment segment. The principal application of DragonWave’s products is mobile network backhaul. Additional applications include leased line replacement, last mile fiber extension and enterprise networks. The Company’s product lines include Harmony, Horizon, Avenue and NetViewer. The Harmony product line is a multi-service wireless platform enabling time division multiplexing (TDM) and packet-based services across wireless or wireline infrastructure. The Company’s Horizon product family is an Ethernet microwave portfolio and consists of Horizon Compact+ and Horizon Quantum. Its NetViewer is a multi-service, multi-product network management platform. The NetViewer enables provisioning, management, monitoring and configuration across the line of products in a single graphical user interface (GUI)-based system.

Ceragon Networks Company Profile

Ceragon Networks Ltd. offers wireless backhaul solutions. The Company’s products include FibeAir IP-20 Platform, FibeAir IP-20 Assured Platform and Network Management. The Company provides its services to wireless service providers, public safety organizations, government agencies and utility companies, among others. Its solutions are deployed by over 460 service providers, as well as a range of private network owners, in over 130 countries. The Company’s FibeAir IP-20 platform offers flexibility in choosing all-outdoor, split-mount and all-indoor configurations to suit any deployment scenario. The FibeAir IP-20 platform includes product categories, such as shorthaul-access and shorthaul-aggregation. The FibeAir IP-20 Assured platform includes product categories, such as shorthaul-access, shorthaul-aggregation, small cells, longhaul and enterprise access. Its NetMaster is a Network Management System (NMS), which is designed for managing large-scale wireless backhaul networks.

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