Critical Analysis: EMC (EMC) versus PC Connection (CNXN)
EMC (NYSE: EMC) and PC Connection (NASDAQ:CNXN) are both technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.
Insider and Institutional Ownership
79.9% of EMC shares are owned by institutional investors. Comparatively, 40.7% of PC Connection shares are owned by institutional investors. 0.4% of EMC shares are owned by company insiders. Comparatively, 57.3% of PC Connection shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares EMC and PC Connection’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
EMC has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, PC Connection has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500.
This is a breakdown of current ratings for EMC and PC Connection, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
EMC presently has a consensus target price of $29.00, indicating a potential downside of 0.17%. PC Connection has a consensus target price of $33.00, indicating a potential upside of 34.04%. Given PC Connection’s stronger consensus rating and higher probable upside, analysts clearly believe PC Connection is more favorable than EMC.
EMC pays an annual dividend of $0.46 per share and has a dividend yield of 1.6%. PC Connection does not pay a dividend. EMC pays out 43.0% of its earnings in the form of a dividend. PC Connection has raised its dividend for 3 consecutive years.
Valuation & Earnings
This table compares EMC 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|
|PC Connection||$2.86 billion||0.23||$90.07 million||$1.79||13.75|
PC Connection has higher revenue and earnings than EMC. PC Connection is trading at a lower price-to-earnings ratio than EMC, indicating that it is currently the more affordable of the two stocks.
PC Connection beats EMC on 10 of the 13 factors compared between the two stocks.
EMC Company Profile
EMC Corporation (EMC) develops, delivers and supports the information technology (IT) industry’s range of information infrastructure and virtual infrastructure technologies, solutions and services. EMC manages the Company as part of a federation of businesses: EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream. EMC’s Information Infrastructure business provides a foundation for organizations to store, manage, protect, analyze and secure information. EMC’s VMware Virtual Infrastructure business is engaged in virtualization and cloud infrastructure solutions that enable businesses to help transform the way they build, deliver and consume IT resources in a manner that is based on their specific needs. EMC’s Pivotal business unites strategic technology, people and programs from EMC and VMware and has a platform that consists of data, agile development practices and a cloud independent platform-as-a-service.
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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