Head to Head Analysis: West (WSTC) & Cisco Systems (CSCO)

West (NASDAQ: WSTC) and Cisco Systems (NASDAQ:CSCO) are both technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.

Dividends

West pays an annual dividend of $0.45 per share and has a dividend yield of 1.9%. Cisco Systems pays an annual dividend of $1.16 per share and has a dividend yield of 3.0%. West pays out 17.9% of its earnings in the form of a dividend. Cisco Systems pays out 60.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Earnings and Valuation

This table compares West and Cisco Systems’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
West N/A N/A N/A $2.52 9.33
Cisco Systems $48.01 billion 3.99 $9.61 billion $1.93 20.09

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

Analyst Recommendations

This is a summary of recent ratings and target prices for West and Cisco Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
West 0 4 0 0 2.00
Cisco Systems 0 12 20 0 2.63

West presently has a consensus target price of $23.75, suggesting a potential upside of 1.06%. Cisco Systems has a consensus target price of $39.10, suggesting a potential upside of 0.86%. Given West’s higher probable upside, analysts plainly believe West is more favorable than Cisco Systems.

Profitability

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

Net Margins Return on Equity Return on Assets
West 7.79% N/A 5.18%
Cisco Systems 20.26% 16.64% 8.47%

Institutional & Insider Ownership

67.4% of West shares are held by institutional investors. Comparatively, 75.6% of Cisco Systems shares are held by institutional investors. 4.6% of West shares are held by insiders. Comparatively, 0.1% of Cisco Systems shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Cisco Systems beats West on 9 of the 13 factors compared between the two stocks.

About West

West Corporation is a provider of communication and network infrastructure services. The Company helps its clients communicate, collaborate and connect with their audiences through a portfolio of solutions that include unified communications services, safety services, and interactive services, such as automated notifications, specialized agent services and telecom services. The Company’s segments include Unified Communications Services, which includes collaboration services, Unified Communications as a Service (UCaaS) and telecom services; Safety Services, which includes carrier services, government solutions and advanced services; Interactive Services, including outbound (proactive notifications-voice, text/short messaging service (SMS) and chat), inbound speech solutions (interactive voice response or IVR), Web, mobile and professional services, and Specialized Agent Services, which includes healthcare advocacy services, cost management services and revenue generation.

About Cisco Systems

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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