Contrasting Freenet (OTCMKTS:FRTAF) and Ribbon Communications (NASDAQ:RBBN)

Freenet (OTCMKTS:FRTAF) and Ribbon Communications (NASDAQ:RBBN) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Insider & Institutional Ownership

70.9% of Ribbon Communications shares are owned by institutional investors. 2.1% of Ribbon Communications shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Freenet	N/A	N/A	N/A
Ribbon Communications	-5.14%	7.08%	2.41%

Analyst Recommendations

This is a breakdown of recent ratings for Freenet and Ribbon Communications, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freenet	2	3	1	0	1.83
Ribbon Communications	1	0	4	0	2.60

Ribbon Communications has a consensus price target of $6.00, indicating a potential upside of 59.57%. Given Ribbon Communications’ stronger consensus rating and higher possible upside, analysts clearly believe Ribbon Communications is more favorable than Freenet.

Risk and Volatility

Freenet has a beta of -0.13, meaning that its stock price is 113% less volatile than the S&P 500. Comparatively, Ribbon Communications has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500.

Earnings and Valuation

This table compares Freenet and Ribbon Communications”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freenet	$2.68 billion	1.50	$267.06 million	$2.12	15.99
Ribbon Communications	$833.88 million	0.80	-$54.24 million	($0.25)	-15.04

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

Summary

Ribbon Communications beats Freenet on 8 of the 14 factors compared between the two stocks.

About Freenet

freenet AG provides telecommunications, broadcasting, and multimedia services for mobile communications/mobile internet, and digital lifestyle sectors in Germany. It operates through Mobile Communications, TV and Media, and Other/Holding segments. The Mobile Communications segment engages in the marketing of mobile communications services, which include voice and data services from the mobile network operators; planning, set up, installation, and maintenance services for WiFi networks; and selling and distribution of mobile devices, as well as offers additional services for mobile data communications and digital lifestyle. This segment also provides network-independent services and tariffs; tariffs of the network operators on the basis of the network operator contracts; and freenet Internet, an app-based Internet product. The TV and Media segment is involved in the planning, project management, construction, operation, service, and marketing services for broadcast-related solutions for business clients in the broadcasting and media sectors; and the provision of services to end users in the field of DVB-T2 and IPTV. The Other/Holding segment offers portal services, such as e-commerce/advertising services; payment services; various digital products and entertainment formats for downloading and displaying, as well as use on mobile devices; communication development solutions, IT services, and other services; narrowband voice services; data services; and distribution services. The company provides its services under the klarmobil.de, freenetmobile.de, Dr.SIM, freenet MOBILE, FUNK, freenet FLEX, freenet, freenet TV, waipu.tv, freenet VIDEO, freenet.de, freenet BASICS, freenet ENERGY, freenet BUSINESS, CARMADA, MEDIA BROADCAST, vitrado.de, and The Cloud brands. It sells its products through electronics stores, as well as online sales. freenet AG was incorporated in 2005 and is headquartered in Büdelsdorf, Germany.

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.