Critical Analysis: Radcom (NASDAQ:RDCM) & NetScout Systems (NASDAQ:NTCT)

NetScout Systems (NASDAQ:NTCT) and Radcom (NASDAQ:RDCM) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, profitability, dividends, institutional ownership, risk and earnings.

Risk and Volatility

NetScout Systems has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, Radcom has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Profitability

This table compares NetScout Systems and Radcom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NetScout Systems	10.38%	8.16%	5.85%
Radcom	15.38%	10.73%	8.10%

Analyst Ratings

This is a summary of current recommendations and price targets for NetScout Systems and Radcom, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetScout Systems	0	2	0	1	2.67
Radcom	0	1	1	0	2.50

NetScout Systems presently has a consensus target price of $32.00, suggesting a potential upside of 16.53%. Radcom has a consensus target price of $18.00, suggesting a potential upside of 32.65%. Given Radcom’s higher probable upside, analysts clearly believe Radcom is more favorable than NetScout Systems.

Valuation and Earnings

This table compares NetScout Systems and Radcom”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NetScout Systems	$862.77 million	2.30	-$366.92 million	$1.22	22.51
Radcom	$61.01 million	3.65	$6.97 million	$0.65	20.88

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

Insider and Institutional Ownership

91.6% of NetScout Systems shares are owned by institutional investors. Comparatively, 48.3% of Radcom shares are owned by institutional investors. 3.8% of NetScout Systems shares are owned by insiders. Comparatively, 69.0% of Radcom shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Radcom beats NetScout Systems on 8 of the 15 factors compared between the two stocks.

About NetScout Systems

NetScout Systems, Inc. provides service assurance and cybersecurity solutions for protect digital business services against disruptions in the United States, Europe, Asia, and internationally. The company offers nGeniusONE management software that enables customers to predict, preempt, and resolve network and service delivery problems, as well as facilitate the optimization and capacity planning of their network infrastructures; and specialized platforms and analytic modules that enable its customers to analyze and troubleshoot traffic in radio access and Wi-Fi networks. It also provides nGeniusPULSE, an active testing tool that enables enterprises to identify infrastructure performance issues and determine application availability, reliability, and performance; and nGenius Business Analytics solution, which enables service providers to analyze their network traffic. In addition, the company offers ISNG, an advanced passive network probe; packet flow systems that deliver targeted network traffic access to various monitoring and security tools and systems; and a suite of test access points that enable non-disruptive access to network traffic. Further, it provides cybersecurity solutions to protect their networks against distributed denial of service attacks under the Arbor brand, such as Arbor Sightline, Arbor Threat Mitigation System, Arbor Insight, Arbor Edge Defense, and Arbor Cloud. Additionally, the company offers advanced threat detection solutions, such as Omnis Cyber Investigator. It serves enterprise customers in various industries, including financial services, technology, manufacturing, healthcare, utilities, education, transportation, and retail; mobile operators, wireline operators, cable operators, Internet service providers, and cloud providers; and governmental agencies through a direct sales force, and indirect reseller and distribution channels. The company was incorporated in 1984 and is headquartered in Westford, Massachusetts.

About Radcom

RADCOM Ltd. provides 5G ready cloud-native, network intelligence, and service assurance solutions for telecom operators or communication service providers (CSPs). It offers RADCOM ACE, including RADCOM Service Assurance, a cloud-native, 5G-ready, and virtualized service assurance solutions, which allows telecom operators to gain end-to-end network visibility and customer experience insights across all networks; RADCOM Network Visibility, a cloud-native network packet broker and filtering solution that allows CSPs to manage network traffic at scale across multiple cloud environments, and control the visibility layer to perform analysis of select datasets; and RADCOM Network Insights, a business intelligence solution that offers insights for multiple use cases enabled by data captured and correlated through RADCOM Network Visibility and RADCOM Service Assurance. The company also provides solutions for mobile and fixed networks, such as 5G, long term evolution (LTE), voice over LTE, voice over Wifi, IP multimedia subsystem, voice over IP, and universal mobile telecommunication service. It sells its products directly to customers through executives and sales representatives, as well as through a network of distributors and resellers in North America, Asia Pacific, Latin America, Europe, the Middle East, Africa, and Israel. The company was formerly known as Big Blue Catalogue Ltd. and changed its name to RADCOM Ltd. in 1989. RADCOM Ltd. was incorporated in 1985 and is headquartered in Tel Aviv, Israel.