Harmonic (HLIT) and NTT Docomo (DCM) Critical Contrast

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Harmonic (NYSE: DCM) and NTT Docomo (NYSE:DCM) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Valuation and Earnings

This table compares Harmonic and NTT Docomo’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Harmonic $358.25 million 1.22 -$82.95 million ($0.54) -9.44
NTT Docomo $42.41 billion 2.24 $6.07 billion $1.62 15.80

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

Risk and Volatility

Harmonic has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, NTT Docomo has a beta of 0.1, indicating that its stock price is 90% less volatile than the S&P 500.

Institutional and Insider Ownership

86.5% of Harmonic shares are held by institutional investors. Comparatively, 0.6% of NTT Docomo shares are held by institutional investors. 6.2% of Harmonic shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Harmonic and NTT Docomo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Harmonic -11.52% -5.68% -2.46%
NTT Docomo 15.25% 12.38% 9.34%

Analyst Recommendations

This is a breakdown of current ratings for Harmonic and NTT Docomo, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Harmonic 0 2 2 0 2.50
NTT Docomo 1 2 0 0 1.67

Harmonic currently has a consensus target price of $5.67, indicating a potential upside of 11.11%. Given Harmonic’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Harmonic is more favorable than NTT Docomo.

Dividends

NTT Docomo pays an annual dividend of $0.39 per share and has a dividend yield of 1.5%. Harmonic does not pay a dividend. NTT Docomo pays out 24.1% of its earnings in the form of a dividend. NTT Docomo has raised its dividend for 2 consecutive years.

Summary

NTT Docomo beats Harmonic on 10 of the 17 factors compared between the two stocks.

Harmonic Company Profile

Harmonic Inc. designs, manufactures, and sells video infrastructure products and system solutions worldwide. Its products enable customers to create, prepare, and deliver a range of video and broadband services to consumer devices, including televisions, personal computers, laptops, tablets, and smart phones. The company operates in two segments, Video and Cable Edge. The Video segment sells video processing, and production and playout solutions and services to cable operators, and satellite and telecommunications Pay-TV service providers, as well as to broadcast and media companies, including streaming new media companies. This segment's video processing solutions include network management and application software, and hardware products, such as cloud media processing, broadcast and distribution encoders, contribution encoders, multiscreen transcoders and stream processing systems, multiscreen delivery, decoders and descramblers, and video servers. This segment also provides video-optimized storage systems; and unified video playout and processing software-as-a-service solutions. The Cable Edge segment offers cable edge solutions and related services, including CableOS software-based converged cable access platform solutions; and narrowcast services gateway products primarily to cable operators. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, program management, technical design and planning, building and site preparation, integration and equipment installation, system testing, and training. Harmonic Inc. sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was founded in 1988 and is headquartered in San Jose, California.

NTT Docomo Company Profile

NTT DOCOMO, INC. (DOCOMO) is a mobile telecommunications carrier. The Company operates through three segments: telecommunications business, smart life business and other businesses. The telecommunications business segment includes mobile phone services (long-term evolution (LTE) (Xi) services and freedom of mobile multimedia access (FOMA) services), optical-fiber broadband service, satellite mobile communications services, international services and equipment sales related to these services. The smart life business segment includes video and music distribution, electronic books and other services offered through its dmarket portal, as well as finance/payment services, shopping services and various other services to support the Company’s customers’ daily lives. Its other businesses segment primarily includes Mobile Device Protection Service, as well as the development, sale and maintenance of information technology (IT) systems.

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