Sierra Wireless (SWIR) and Cisco Systems (CSCO) Financial Review

Sierra Wireless (NASDAQ: SWIR) and Cisco Systems (NASDAQ:CSCO) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares Sierra Wireless and Cisco Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sierra Wireless 3.48% 9.32% 6.03%
Cisco Systems 20.02% 16.91% 8.61%

Insider & Institutional Ownership

24.9% of Sierra Wireless shares are held by institutional investors. Comparatively, 75.2% of Cisco Systems shares are held by institutional investors. 2.0% of Sierra Wireless shares are held by insiders. Comparatively, 0.1% of Cisco Systems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Sierra Wireless and Cisco Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sierra Wireless $615.61 million 1.03 $15.38 million $0.72 27.29
Cisco Systems $48.01 billion 3.51 $9.61 billion $1.91 17.80

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sierra Wireless and Cisco Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sierra Wireless 0 9 2 0 2.18
Cisco Systems 0 12 19 0 2.61

Sierra Wireless currently has a consensus price target of $26.30, suggesting a potential upside of 33.84%. Cisco Systems has a consensus price target of $35.24, suggesting a potential upside of 3.68%. Given Sierra Wireless’ higher possible upside, equities analysts plainly believe Sierra Wireless is more favorable than Cisco Systems.

Dividends

Cisco Systems pays an annual dividend of $1.16 per share and has a dividend yield of 3.4%. Sierra Wireless does not pay a dividend. Cisco Systems pays out 60.7% of its earnings in the form of a dividend.

Volatility & Risk

Sierra Wireless has a beta of 3.21, meaning that its share price is 221% more volatile than the S&P 500. Comparatively, Cisco Systems has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Summary

Cisco Systems beats Sierra Wireless on 11 of the 16 factors compared between the two stocks.

Sierra Wireless Company Profile

Sierra Wireless, Inc. is engaged in building the Internet of Things (IoT) with wireless solutions for organizations. The Company’s OEM Solution segment offers cellular embedded wireless modules for IoT connectivity, including an embedded application framework to support customer applications. The Company’s Enterprise Solution segment offers intelligent routers and gateways, including management tools and applications that enable cellular connectivity. The Company’s Cloud and Connectivity Services segment offers a cloud based platform for deploying and managing IoT applications, Smart SIM supported by mobile core networks, and managed wireless broadband services to enable customer IoT deployments. The Company offers a portfolio of second generation, third generation, and fourth generation cellular embedded wireless modules and gateways, integrated with its secure cloud and connectivity services. The Company offers its products to original equipment manufacturers (OEMs) and enterprises.

Cisco Systems Company Profile

Cisco Systems, Inc. designs and sells a range of products, provides services and delivers integrated solutions to develop and connect networks around the world. The Company operates through three geographic segments: Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific, Japan and China (APJC). The Company groups its products and technologies into various categories, such as Switching; Next-Generation Network (NGN) Routing; Collaboration; Data Center; Wireless; Service Provider Video; Security, and Other Products. In addition to its product offerings, the Company provides a range of service offerings, including technical support services and advanced services. The Company delivers its technology and services to its customers as solutions for their priorities, including cloud, video, mobility, security, collaboration and analytics. The Company serves customers, including businesses of all sizes, public institutions, governments and service providers.

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