Financial Contrast: Tech Data Corporation (TECD) and PC Connection (CNXN)

PC Connection (NASDAQ: CNXN) and Tech Data Corporation (NASDAQ:TECD) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitabiliy, valuation, dividends, earnings and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for PC Connection and Tech Data Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PC Connection 0 0 1 0 3.00
Tech Data Corporation 0 3 4 0 2.57

PC Connection presently has a consensus target price of $32.00, suggesting a potential upside of 22.32%. Tech Data Corporation has a consensus target price of $106.60, suggesting a potential upside of 10.66%. Given PC Connection’s stronger consensus rating and higher probable upside, equities research analysts plainly believe PC Connection is more favorable than Tech Data Corporation.

Risk and Volatility

PC Connection has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500. Comparatively, Tech Data Corporation has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.

Valuation and Earnings

This table compares PC Connection and Tech Data Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PC Connection $2.79 billion 0.25 $88.18 million $1.75 14.95
Tech Data Corporation $27.94 billion 0.13 $441.14 million $5.38 17.91

Tech Data Corporation has higher revenue and earnings than PC Connection. PC Connection is trading at a lower price-to-earnings ratio than Tech Data Corporation, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

40.7% of PC Connection shares are held by institutional investors. Comparatively, 93.6% of Tech Data Corporation shares are held by institutional investors. 57.3% of PC Connection shares are held by insiders. Comparatively, 1.6% of Tech Data Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares PC Connection and Tech Data Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PC Connection 1.67% 11.40% 7.32%
Tech Data Corporation 0.69% 11.67% 3.32%

Summary

PC Connection beats Tech Data Corporation on 8 of the 14 factors compared between the two stocks.

PC Connection Company Profile

PC Connection, Inc. is a provider of a range of information technology (IT) solutions. The Company conducts its business operations through three business segments: small- to medium-sized businesses (SMB), Large Account and Public Sector. The Company enables customers to design, enable, manage and service their IT environments. The Company’s IT products include computer systems, software and peripheral equipment, networking communications, and other products and accessories that the Company purchases from manufacturers, distributors and other suppliers. The Company also offers services involving design, configuration and implementation of IT solutions. The Company markets its products and services through its Websites, including www.connection.com, www.connection.com/enterprise, www.connection.com/publicsector, and www.macconnection.com. It uses a combination of outbound telemarketing, including some on-site sales solicitation by business development managers.

Tech Data Corporation Company Profile

Tech Data Corporation is a wholesale distributor of technology products. The Company serves as a link in the technology supply chain by bringing products from the technology vendors to market, as well as providing its customers with logistics capabilities and services. It operates through the segment of distributing technology products, logistics management and other value-added services. It operates in two geographic segments: the Americas and Europe. It provides resellers training and technical support suite of electronic commerce tools customized shipping documents product configuration or integration services and access to financing programs. Its customers include value-added resellers, direct marketers, retailers and corporate resellers who support the diverse technology needs of end users. It sells its products to customers in approximately 100 countries throughout North America, South America, Europe, the Middle East and Africa.

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