Critical Survey: Allot Communications (ALLT) versus NEC (NIPNF)

Allot Communications (NASDAQ:ALLT) and NEC (OTCMKTS:NIPNF) are both computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, valuation and risk.

Analyst Recommendations

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This is a summary of recent recommendations for Allot Communications and NEC, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allot Communications 0 2 2 0 2.50
NEC 0 0 0 0 N/A

Allot Communications currently has a consensus price target of $6.18, suggesting a potential downside of 11.79%. Given Allot Communications’ higher probable upside, analysts clearly believe Allot Communications is more favorable than NEC.

Insider & Institutional Ownership

61.1% of Allot Communications shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Allot Communications and NEC’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allot Communications $81.99 million 2.88 -$18.07 million ($0.35) -20.00
NEC $25.69 billion 0.30 $412.83 million N/A N/A

NEC has higher revenue and earnings than Allot Communications.

Profitability

This table compares Allot Communications and NEC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allot Communications -14.04% -6.50% -4.87%
NEC 1.26% 3.50% 1.33%

Summary

NEC beats Allot Communications on 5 of the 9 factors compared between the two stocks.

About Allot Communications

Allot Communications Ltd. is a provider of leading innovative network intelligence and security solutions for service providers worldwide, enhancing value to their customers. Their solutions are deployed globally for network and application analytics, traffic control and shaping, network-based security services, and more. Allot’s multi-service platforms are deployed by over 500 mobile, fixed and cloud service providers and over 1000 enterprises. Their industry leading network-based security as a service solution has achieved over 50% penetration with some service providers and is already used by over 20 million subscribers in Europe.

About NEC

NEC Corporation engages in the integration of information technology (IT) and network technologies worldwide. It operates in four segments: Public, Enterprise, Telecom Carrier, and System Platform. The company provides systems integration services, such as systems implementation and consulting; maintenance and support services; outsourcing/cloud services; and system equipment. It also provides network infrastructure products, including core network products, mobile phone base stations, submarine systems comprising submarine cable and ocean observation systems, optical transmission systems, routers/switches, and mobile backhaul products, as well as telecom operations and management solutions, and other services/solutions. In addition, the company provides hardware products, such as servers, mainframes, supercomputers, storage products, business PCs, tablet devices, POS, ATMs, control equipment, wireless LAN routers, displays, and projectors; and software products that consist of integrated operation management, application servers, and security and database software. Further, it offers enterprise network solutions that include IP telephony systems, WAN/wireless access equipment, and LAN products; data center infrastructure services; and safety products, which include biometric solutions comprising face recognition and fingerprint identification, surveillance products, Smart energy products, and lighting equipment. Additionally, the company engages in the provision of IT services for retail sector; and manufacturing co-creation program activities. It primarily serves governments, governmental agencies, local governments, public institutions, financial institutions, and other organizations, as well as telecom carriers. The company was formerly known as Nippon Electric Company, Limited and changed its name to NEC Corporation in April 1983. NEC Corporation was founded in 1899 and is headquartered in Tokyo, Japan.

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