ADTRAN (ADTN) vs. Fabrinet (FN) Critical Analysis

ADTRAN (NASDAQ:ADTN) and Fabrinet (NYSE:FN) are both small-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Valuation and Earnings

This table compares ADTRAN and Fabrinet’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ADTRAN $666.58 million 1.31 $23.84 million $0.89 20.53
Fabrinet $1.37 billion 1.22 $84.16 million $2.98 15.46

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

Risk and Volatility

ADTRAN has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, Fabrinet has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.

Insider and Institutional Ownership

95.1% of ADTRAN shares are held by institutional investors. Comparatively, 99.5% of Fabrinet shares are held by institutional investors. 2.5% of ADTRAN shares are held by insiders. Comparatively, 3.3% of Fabrinet shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares ADTRAN and Fabrinet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ADTRAN -2.15% -0.56% -0.41%
Fabrinet 6.14% 12.68% 8.72%

Analyst Ratings

This is a summary of current recommendations and price targets for ADTRAN and Fabrinet, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ADTRAN 0 6 2 0 2.25
Fabrinet 0 3 3 0 2.50

ADTRAN presently has a consensus price target of $17.88, indicating a potential downside of 2.16%. Fabrinet has a consensus price target of $45.33, indicating a potential downside of 1.60%. Given Fabrinet’s stronger consensus rating and higher possible upside, analysts plainly believe Fabrinet is more favorable than ADTRAN.

Dividends

ADTRAN pays an annual dividend of $0.36 per share and has a dividend yield of 2.0%. Fabrinet does not pay a dividend. ADTRAN pays out 40.4% of its earnings in the form of a dividend.

Summary

Fabrinet beats ADTRAN on 13 of the 16 factors compared between the two stocks.

ADTRAN Company Profile

ADTRAN, Inc. provides networking and communications equipment worldwide. The company operates through two segments, Network Solutions and Services & Support. It offers access and aggregation solutions, including network management and subscriber services control and orchestration software within a SD-access architecture; SDN-controlled programmable network elements; fiber to the premises and fiber to the node (FTTN) multi-service access nodes (MSAN); fiber aggregation and FTTN MSAN; fiber to the distribution point optical network units; optical line terminals; optical networking edge aggregation; and IP digital subscriber line access multiplexers. The company's access and aggregation solutions also comprise cabinet and outside-plant enclosures and services; pluggable optical transceivers, cables, and other miscellaneous materials; and other products and services. In addition, it provides customer devices comprising broadband customer premise solutions, such as passive optical network and point-to-point Ethernet optical network terminals; radio frequency over glass micro nodes; residential and business gateways; Wi-Fi access points and related powering and switching infrastructure; enterprise session border controllers; carrier Ethernet services termination devices; voice over Internet protocol media gateways; and other products and services. Further, the company offers time division multiplexed and asynchronous transfer mode based aggregation systems and customer devices; HDSL, ADSL, and other technologies; and other products and services. Additionally, it provides planning, engineering, program management, maintenance, support, installation, commissioning, and implementation services. The company serves communications service providers, distributed enterprises and small and medium-sized businesses, public and private enterprises, and individual users. ADTRAN, Inc. was founded in 1985 and is headquartered in Huntsville, Alabama.

Fabrinet Company Profile

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, packaging, integration, final assembly, and test. Its products comprise switching products, such as reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths and speeds, and over various distances; tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as for Infiniband, Ethernet, fiber channel, and optical backplane connectivity. The company also offers solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. In addition, it designs and fabricates application-specific crystals, lenses, prisms, mirrors, and laser components and substrates, as well as other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. The company serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, medical devices, and sensors. Fabrinet was incorporated in 1999 and is based in George Town, the Cayman Islands.

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