Billionaire Steve Cohen’s SAC Owns 5% of Arris Group

We would compare Arris to Cisco Systems, Inc. (NASDAQ:CSCO), Motorola Solutions Inc (NYSE:MSI), Juniper Networks, Inc. (NYSE:JNPR), and Alcatel Lucent SA (NYSE:ALU). Alcatel Lucent is down 24% in the last year, and the struggling company trades at 55 times this year’s expected earnings. We would avoid it. The forward P/Es for the other three companies are between 10 and 16, placing Arris towards the lower end of the range. Cisco is the cheapest in those terms, and the large company’s trailing earnings multiple is low as well at 14. With the company reporting substantial earnings growth in its most recent quarter compared to the same period in the previous fiscal year, we think it has good value prospects. Motorola and Juniper’s patterns of earnings multiples suggest that the Street expects strong growth over the next year, though we are less sure (particularly in Juniper’s case, going by relatively flat performance on both top and bottom lines over the last year).

It seems at least possible that Arris is a good value, and while we wouldn’t recommend it outright without learning more about the company we think that SAC may have found a good suggestion for investors to do further research. Certainly the valuation is acceptable as long as it is on track to meet analyst forecasts, and the company has been growing nicely. We would encourage investors to look at Cisco as well, since that company could be a better deal.

Disclosure: I own no shares of any stocks mentioned in this article.