RadiSys Corporation (NASDAQ: RSYS) and PC Connection (NASDAQ:CNXN) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitabiliy, institutional ownership, earnings, dividends, risk and analyst recommendations.

Profitability

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

Net Margins Return on Equity Return on Assets
RadiSys Corporation -14.38% -14.12% -5.46%
PC Connection 1.66% 11.53% 7.49%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for RadiSys Corporation and PC Connection, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RadiSys Corporation 0 0 4 0 3.00
PC Connection 0 0 1 0 3.00

RadiSys Corporation currently has a consensus price target of $3.63, indicating a potential upside of 114.50%. PC Connection has a consensus price target of $33.00, indicating a potential upside of 29.92%. Given RadiSys Corporation’s higher probable upside, analysts plainly believe RadiSys Corporation is more favorable than PC Connection.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RadiSys Corporation $168.66 million 0.39 -$8.87 million ($0.63) -2.68
PC Connection $2.86 billion 0.24 $90.17 million $1.79 14.19

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

Institutional & Insider Ownership

57.4% of RadiSys Corporation shares are held by institutional investors. Comparatively, 41.2% of PC Connection shares are held by institutional investors. 4.9% of RadiSys Corporation shares are held by company insiders. Comparatively, 57.3% of PC Connection shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

RadiSys Corporation has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500. Comparatively, PC Connection has a beta of 1.63, suggesting that its stock price is 63% more volatile than the S&P 500.

Summary

PC Connection beats RadiSys Corporation on 8 of the 12 factors compared between the two stocks.

RadiSys Corporation Company Profile

Radisys Corporation (Radisys) is a services acceleration company. The Company’s application aware traffic distribution platforms, real-time media processing products and wireless access technologies enable service providers to virtualize and monetize their networks. The Company’s products and services are organized into two segments: Software-Systems, and Embedded Products and Hardware Services. The Company’s Software-Systems segment consists of three product families: FlowEngine, MediaEngine and CellEngine. Also included in the Software-Systems segment is its Professional Service organization. The Company’s Embedded Products and Hardware Services segment provides customers with hardware based products targeted at the communications and healthcare markets. Products within this segment fall under primary categories, including T-Series Advanced Telecommunications Computing Architecture (ATCA) Platforms, Component Object Model (COM) Express and Rackmount Servers, and Other Products.

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.

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