Motorola Solutions (NYSE: MSI) and Arista Networks (NYSE:ANET) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Risk & Volatility

Motorola Solutions has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500. Comparatively, Arista Networks has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Earnings & Valuation

This table compares Motorola Solutions and Arista Networks’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Motorola Solutions $6.19 billion 2.36 $1.60 billion $3.79 23.73
Arista Networks $1.36 billion 10.19 $350.69 million $3.85 49.65

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Motorola Solutions and Arista Networks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Motorola Solutions 0 3 9 0 2.75
Arista Networks 0 13 18 0 2.58

Motorola Solutions currently has a consensus target price of $93.91, indicating a potential upside of 4.42%. Arista Networks has a consensus target price of $168.89, indicating a potential downside of 11.64%. Given Motorola Solutions’ stronger consensus rating and higher probable upside, analysts clearly believe Motorola Solutions is more favorable than Arista Networks.

Profitability

This table compares Motorola Solutions and Arista Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Motorola Solutions 10.38% -93.44% 10.07%
Arista Networks 21.74% 22.64% 14.49%

Dividends

Motorola Solutions pays an annual dividend of $1.88 per share and has a dividend yield of 2.1%. Arista Networks does not pay a dividend. Motorola Solutions pays out 49.6% of its earnings in the form of a dividend. Motorola Solutions has increased its dividend for 6 consecutive years.

Insider & Institutional Ownership

87.4% of Motorola Solutions shares are owned by institutional investors. Comparatively, 59.3% of Arista Networks shares are owned by institutional investors. 2.5% of Motorola Solutions shares are owned by insiders. Comparatively, 28.1% of Arista Networks shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Arista Networks beats Motorola Solutions on 10 of the 17 factors compared between the two stocks.

About Motorola Solutions

Motorola Solutions, Inc. is a provider of communication infrastructure, devices, accessories, software and services. The Company operates through two segments: Products and Services. The Company’s Products segment offers a portfolio of infrastructure, devices, accessories and software. The Products segment has two product lines: Devices and Systems. The primary customers of the Products segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers operating private communications networks and manage a mobile workforce. The Company’s Services segment provides a range of service offerings for government, public safety and commercial communication networks. The Services segment product lines include Integration services, Managed & Support services, and Integrated Digital Enhanced Network (iDEN) services.

About Arista Networks

Arista Networks, Inc. is a supplier of cloud networking solutions that use software innovations to address the needs of Internet companies, cloud service providers and data centers for enterprise support. It develops, markets and sells cloud networking solutions, which consist of its Gigabit Ethernet switches and related software. The Company’s cloud networking solutions consist of its Extensible Operating System (EOS), a set of network applications and its Ethernet switching and routing platforms. The programmability of EOS has allowed it to create a set of software applications that address the requirements of cloud networking, including workflow automation, network visibility and analytics, and has also allowed it to integrate with a range of third-party applications for virtualization, management, automation, orchestration and network services. EOS supports cloud and virtualization solutions, including VMware NSX, Microsoft System Center and other cloud management frameworks.

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