Head-To-Head Review: TDK (OTCMKTS:TTDKY) and TE Connectivity (NYSE:TEL)

TE Connectivity (NYSE:TEL) and TDK (OTCMKTS:TTDKY) are both large-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for TE Connectivity and TDK, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TE Connectivity	0	4	12	1	2.82
TDK	0	0	0	1	4.00

TE Connectivity presently has a consensus target price of $251.93, suggesting a potential upside of 6.75%. Given TE Connectivity’s higher probable upside, equities analysts clearly believe TE Connectivity is more favorable than TDK.

Dividends

TE Connectivity pays an annual dividend of $2.84 per share and has a dividend yield of 1.2%. TDK pays an annual dividend of $0.12 per share and has a dividend yield of 0.8%. TE Connectivity pays out 41.0% of its earnings in the form of a dividend. TDK pays out 18.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. TE Connectivity has raised its dividend for 12 consecutive years. TE Connectivity is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

91.4% of TE Connectivity shares are owned by institutional investors. 0.6% of TE Connectivity shares are owned by company insiders. Comparatively, 0.0% of TDK shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares TE Connectivity and TDK’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TE Connectivity	11.41%	22.72%	11.47%
TDK	7.85%	9.83%	4.86%

Risk and Volatility

TE Connectivity has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500. Comparatively, TDK has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Earnings & Valuation

This table compares TE Connectivity and TDK”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TE Connectivity	$17.26 billion	4.01	$1.84 billion	$6.93	34.05
TDK	$14.48 billion	1.98	$1.10 billion	$0.66	22.30

TE Connectivity has higher revenue and earnings than TDK. TDK is trading at a lower price-to-earnings ratio than TE Connectivity, indicating that it is currently the more affordable of the two stocks.

Summary

TE Connectivity beats TDK on 15 of the 17 factors compared between the two stocks.

About TE Connectivity

TE Connectivity Ltd., together with its subsidiaries, manufactures and sells connectivity and sensor solutions in Europe, the Middle East, Africa, the AsiaPacific, and the Americas. The company operates through three segments: Transportation Solutions, Industrial Solutions, and Communications Solutions. The Transportation Solutions segment provides terminals and connector systems and components, sensors, relays, antennas, and application tooling products for use in the automotive, commercial transportation, and sensor markets. The Industrial Solutions segment offers terminals and connector systems and components; and interventional medical components, relays, heat shrink tubing, and wires and cables for industrial equipment, aerospace, defense, marine, medical, and energy markets. The Communications Solutions segment supplies electronic components, such as terminals and connector systems and components, relays, heat shrink tubing, and antennas for the data and devices, and appliances markets. The company sells its products to approximately 140 countries primarily through direct sales to manufacturers, as well as through third-party distributors. The company was formerly known as Tyco Electronics Ltd. and changed its name to TE Connectivity Ltd. in March 2011. TE Connectivity Ltd. was founded in 1941 and is based in Schaffhausen, Switzerland.

About TDK

TDK Corporation, together with its subsidiaries, engages in manufacture and sale of electronic components in Japan, Europe, China, Asia, the Americas, and internationally. The company operates through Passive Components, Sensor Application Products, Magnetic Application Products, Energy Application Products, and Other segments. The Passive Components segment offers ceramic capacitors, aluminum electrolytic capacitors, film capacitors, high-frequency components, piezoelectric materials, and circuit protection components, as well as inductive devices, including ferrite cores, coils, and transformers. The Sensor Application Products segment provides temperature and pressure, magnetic, and MEMS sensors. The Magnetic Application Products segment offers hard disk drives (HDD) heads, HDD suspension assemblies, and magnets. The Energy Application Products segment provides energy devices comprising rechargeable batteries, and power supplies. The Other segment provides mechatronics production equipment and camera module micro actuators for smartphones and other products. The company also engages in engages in insurance and real estate agency businesses. The company was formerly known as Tokyo Denki Kagaku Kogyo K.K. and changed its name to TDK Corporation in 1983. TDK Corporation was founded in 1935 and is headquartered in Tokyo, Japan.