Critical Review: Yaskawa Electric (OTCMKTS:YASKY) versus CDW (NASDAQ:CDW)

Yaskawa Electric (OTCMKTS:YASKY) and CDW (NASDAQ:CDW) are both technology companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Institutional and Insider Ownership

93.2% of CDW shares are held by institutional investors. 0.8% of CDW shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Yaskawa Electric and CDW, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yaskawa Electric	0	2	2	3	3.14
CDW	0	3	5	1	2.78

CDW has a consensus price target of $150.38, suggesting a potential upside of 2.90%. Given CDW’s higher probable upside, analysts clearly believe CDW is more favorable than Yaskawa Electric.

Profitability

This table compares Yaskawa Electric and CDW’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Yaskawa Electric	6.11%	7.00%	4.20%
CDW	4.60%	50.61%	7.91%

Dividends

Yaskawa Electric pays an annual dividend of $0.55 per share and has a dividend yield of 0.9%. CDW pays an annual dividend of $2.52 per share and has a dividend yield of 1.7%. Yaskawa Electric pays out 32.4% of its earnings in the form of a dividend. CDW pays out 30.3% 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. CDW has raised its dividend for 10 consecutive years. CDW is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Yaskawa Electric and CDW”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yaskawa Electric	$3.62 billion	2.08	$236.12 million	$1.70	34.16
CDW	$22.42 billion	0.81	$1.07 billion	$8.32	17.56

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

Risk and Volatility

Yaskawa Electric has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500. Comparatively, CDW has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500.

Summary

CDW beats Yaskawa Electric on 12 of the 18 factors compared between the two stocks.

About Yaskawa Electric

YASKAWA Electric Corporation engages in motion control, robotics, system engineering, and other businesses worldwide. It manufactures and sells various AC drives, including general purpose AC drives, specific purpose AC drives, AC Drive for systems, regenerative energy saving units, and PM motors for use in household appliances, such as air conditioners and refrigerators; social infrastructures comprising elevators, escalators, trains, cranes, fans, and pumps; and factories that manufacture printing machinery, textile machinery, rubber machinery, and other materials. The company also offers rotary servo motors, direct drive servo motors, linear motors/linear sliders, machine controllers, positioning sensor encoders, and servo amplifiers for use in industrial robots, semiconductor manufacturing apparatus, machine tools, flat panel display manufacturing equipment, and metal working machines; and arc and spot welding, handling/assembling, collaborative, biomedical, palletizing, press handling, sealing/cutting/laser machining, deburring, painting, glass substrates transfer, and semiconductor wafer transfer robots for use in semiconductor wafer conveyance, arc welding, spot welding, handling, assembly, and palletizing applications. In addition, it provides industrial system electrical products, such as medium-voltage AC drives, system use AC drives, and system controllers for use in iron and steel systems, water and wastewater treatment, crane, and paper-making/film/port cargo handling/fiber/printing applications. Further, the company offers equipment for energy saving and creation comprising PV inverters, systems for large wind turbines, control equipment for small-scale power generation, and motor drive systems for use in photovoltaic power generation, large-scale wind power generation, small-scale power generation, and electric vehicles. The company was founded in 1915 and is headquartered in Kitakyushu, Japan.

About CDW

CDW Corporation provides information technology (IT) solutions in the United States, the United Kingdom, and Canada. It operates through three segments: Corporate, Small Business, and Public. The company offers discrete hardware and software products and services, as well as integrated IT solutions, including on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security. It also provides hardware products comprising notebooks/mobile devices, tablets, network communications, desktop computers, collaboration, data storage and servers, and others; and software products, such as cloud solutions, software assurance, application suites, security, virtualization, operating systems, and network management. In addition, the company offers advisory and design, software development, implementation, managed, professional, configuration, partner, and telecom services, as well as warranties; delivers and manages mission critical software, systems, and network solutions; and implementation and installation, and repair services to its customers through various third-party service providers. It serves government, education, and healthcare customers; and small, medium, and large business customers. CDW Corporation was founded in 1984 and is headquartered in Vernon Hills, Illinois.