PC Connection (NASDAQ: CNXN) and Key Tronic Corporation (NASDAQ:KTCC) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, valuation, risk and earnings.

Insider & Institutional Ownership

41.4% of PC Connection shares are held by institutional investors. Comparatively, 41.6% of Key Tronic Corporation shares are held by institutional investors. 57.3% of PC Connection shares are held by company insiders. Comparatively, 7.1% of Key Tronic Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

PC Connection has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500. Comparatively, Key Tronic Corporation has a beta of -0.11, indicating that its share price is 111% less volatile than the S&P 500.

Earnings & Valuation

This table compares PC Connection and Key Tronic Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PC Connection $2.86 billion 0.24 $90.07 million $1.79 14.20
Key Tronic Corporation $467.80 million 0.16 $16.61 million $0.51 13.47

PC Connection has higher revenue and earnings than Key Tronic Corporation. Key Tronic 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.

Profitability

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

Net Margins Return on Equity Return on Assets
PC Connection 1.66% 11.39% 7.37%
Key Tronic Corporation 1.20% 5.17% 2.41%

Analyst Ratings

This is a breakdown of current ratings and target prices for PC Connection and Key Tronic Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PC Connection 0 0 1 0 3.00
Key Tronic Corporation 0 0 1 0 3.00

PC Connection currently has a consensus target price of $33.00, suggesting a potential upside of 29.82%. Key Tronic Corporation has a consensus target price of $9.25, suggesting a potential upside of 34.64%. Given Key Tronic Corporation’s higher probable upside, analysts plainly believe Key Tronic Corporation is more favorable than PC Connection.

Summary

PC Connection beats Key Tronic Corporation on 10 of the 12 factors compared between the two stocks.

About PC Connection

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.

About Key Tronic Corporation

Key Tronic Corporation, doing business as KeyTronicEMS Co., is engaged in contract manufacturing for a range of products. The Company provides electronic manufacturing services (EMS) and solutions to original equipment manufacturers (OEMs) of a range of products. The Company provides engineering services, procurement and distribution, materials management, manufacturing and assembly services, in-house testing, and customer service. The Company provides EMS services, such as product design, surface mount technologies (SMT) and pin through hole capability for printed circuit board assembly (PCBA), tool making, precision plastic molding, sheet metal fabrication, liquid injection molding, complex assembly, automated tape winding, prototype design and full product assembly. The Company’s manufacturing operations are located in Oakdale, Minnesota; Fayetteville, Arkansas; Corinth, Mississippi; Harrodsburg, Kentucky, and foreign manufacturing operations in Juarez, Mexico, and Shanghai, China.

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