Today, we’re going to look at five networking stocks. The idea behind this article is to illustrate the wide variations existing in the performance of small to mid cap companies in this highly competitive niche.
First up is JDS Uniphase Corporation (JDSU), a mid cap with trailing twelve month gross revenues of $1.8 billion and a return on equity of 7.25%. Priced at $10.28 with a price to book of 2.4, it is one of the stronger companies in the mix we examine today. It has a modest net income per employee of $14,320. Contrast this with Spirent Communications Plc. (SPMYY) which has a net income per employee of $57,551 and a return on equity of 21.62%.
Spirent, also a mid-cap, with less than one-third the staff of rival JDS Uniphase Corporation and has trailing twelve month gross revenues of just over $515 million. SPMYY stock trades at $7.95 and boasts a price to book of 3.09. Now here’s the kicker…Spirent’s net income exceeds that of JDSU by $13 million, yet JDSU has three times the gross revenue Spirent generated in the same time frame! Past income statements reveal that JDS may invest substantially more in research and development than rival Spirent. This may signal that JDS is a better bet, long term. It may also explain the disparity in net income to gross revenues.
Moving on to Fabrinet (FN), we have a small cap trading at $12.25 with a price to book of 1.79. Fabrinet’s trailing twelve month gross revenues are just below $95 million and each employee contributes $9,498 to net income. To continue reading, click here