Critical Analysis: Bandwidth (NASDAQ:BAND) and CommScope (NASDAQ:COMM)

Bandwidth (NASDAQ:BAND) and CommScope (NASDAQ:COMM) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Institutional and Insider Ownership

68.5% of Bandwidth shares are held by institutional investors. Comparatively, 88.0% of CommScope shares are held by institutional investors. 6.5% of Bandwidth shares are held by insiders. Comparatively, 2.6% of CommScope shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Bandwidth and CommScope”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bandwidth	$748.49 million	0.61	-$6.52 million	($0.35)	-43.57
CommScope	$4.21 billion	0.42	-$315.50 million	$2.73	3.00

Bandwidth has higher earnings, but lower revenue than CommScope. Bandwidth is trading at a lower price-to-earnings ratio than CommScope, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Bandwidth has a beta of 1.82, suggesting that its stock price is 82% more volatile than the S&P 500. Comparatively, CommScope has a beta of 2.29, suggesting that its stock price is 129% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Bandwidth and CommScope, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bandwidth	1	1	4	0	2.50
CommScope	2	3	0	0	1.60

Bandwidth currently has a consensus target price of $20.80, indicating a potential upside of 36.39%. CommScope has a consensus target price of $4.88, indicating a potential downside of 40.55%. Given Bandwidth’s stronger consensus rating and higher possible upside, equities analysts clearly believe Bandwidth is more favorable than CommScope.

Profitability

This table compares Bandwidth and CommScope’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bandwidth	-0.14%	1.46%	0.48%
CommScope	16.89%	-4.51%	1.68%

About Bandwidth

Bandwidth is a leading enterprise cloud communications company. Companies like Cisco, Google, Microsoft, RingCentral, Uber, and Zoom use Bandwidth’s APIs to easily embed voice, messaging, and emergency services into software and applications. Bandwidth is the first and only CPaaS provider offering a robust selection of communications APIs built around their own IP voice network.

About CommScope

CommScope Holding Company, Inc. provides infrastructure solutions for communications, data center, and entertainment networks worldwide. The company operates through Connectivity and Cable Solutions (CCS); Outdoor Wireless Networks (OWN); Networking, Intelligent Cellular and Security Solutions (NICS), and Access Network Solutions (ANS) segments. The CCS segment provides network solutions for indoor and outdoor network applications; and fiber optic and copper connectivity and cable solutions for use in telecommunications, cable television, residential broadband networks, data centers and business enterprises. The OWN segment provides base station antennas, radio frequency filters, tower connectivity, microwave antennas, metro cell products, cabinets, steel towers, accessories, wireless Spectrum management business and Comsearch products. The NICS segment offers indoor and outdoor Wi-Fi and long-term evolution (LTE) access points, access and aggregation switches; an Internet of Things suite, on-premises and cloud-based control and management systems; and software and software-as-a-service applications. The ANS segment offers cable modem termination systems, video infrastructure, distribution and transmission equipment and cloud solutions that enable facility-based service providers to construct a state-of-the-art residential and metro distribution network. It offers its products and services through independent distributors, specialized resellers and distributors, wireless and wireline operators, original equipment manufacturers, and system integrators, as well as directly to customers. The company was formerly known as Cedar I Holding Company, Inc. and changed its name to CommScope Holding Company, Inc. in January 2011. CommScope Holding Company, Inc. was founded in 1976 and is based in Claremont, North Carolina.