Reviewing Emulex (ELX) & Brocade Communications Systems (BRCD)

Emulex (NYSE: ELX) and Brocade Communications Systems (NASDAQ:BRCD) are both companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Profitability

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This table compares Emulex and Brocade Communications Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emulex -61.34% -54.64% -34.34%
Brocade Communications Systems -3.56% -3.07% -1.62%

Dividends

Brocade Communications Systems pays an annual dividend of $0.22 per share and has a dividend yield of 1.7%. Emulex does not pay a dividend.

Insider & Institutional Ownership

83.7% of Brocade Communications Systems shares are owned by institutional investors. 1.8% of Brocade Communications Systems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Emulex and Brocade Communications Systems’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Emulex N/A N/A N/A N/A N/A
Brocade Communications Systems $2.35 billion 2.24 $213.81 million N/A N/A

Brocade Communications Systems has higher revenue and earnings than Emulex.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Emulex and Brocade Communications Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emulex 0 0 0 0 N/A
Brocade Communications Systems 0 3 0 0 2.00

Brocade Communications Systems has a consensus target price of $12.83, indicating a potential upside of 1.13%. Given Brocade Communications Systems’ higher probable upside, analysts clearly believe Brocade Communications Systems is more favorable than Emulex.

Summary

Brocade Communications Systems beats Emulex on 8 of the 8 factors compared between the two stocks.

About Emulex

Emulex Corporation (Emulex) is a provider of network connectivity, monitoring and management products. It provides solutions for networks that support enterprise, cloud, government and telecommunications sectors. The Company’s portfolio of input/output (I/O) connectivity offerings, including the line of Ethernet and Fiber Channel-based connectivity products, has been designed into server and storage solutions. Its monitoring and management solutions include its network visibility and recording products. The Company’s network connectivity, monitoring and management solutions are offered through two business segments: Connectivity Segment and the Visibility Segment. The Connectivity Segment comprises the Company’s Emulex products, and network connectivity products (NCP) and storage connectivity and other products (SCOP). Its Visibility Segment comprises its Network Visibility Products (NVP).

About Brocade Communications Systems

Brocade Communications Systems, Inc. (Brocade) is a supplier of networking hardware, software and services, including storage area networking (SAN) solutions and Internet protocol (IP) networking solutions for businesses and organizations of various types and sizes. The Company operates through three segments: SAN Products, IP Networking Products and Global Services. The SAN Products segment includes infrastructure products and solutions that help customers develop and deploy storage and server consolidation, disaster recovery and data security. The IP Networking Products segment includes Layer 2 and Layer 3 Ethernet switches, and routers to connect users over private and public networks. The Global Services segment includes break or fix maintenance, installation, consulting, network management and software maintenance, and post-contract customer support. Its products enable customers to deploy architectures and technologies, including virtualization and cloud computing.

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