PC Connection (NASDAQ: CNXN) and EMC (NYSE:EMC) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.

Dividends

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 increased its dividend for 3 consecutive years.

Earnings and Valuation

This table compares PC Connection and EMC’s revenue, earnings per share 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 13.74
EMC N/A N/A N/A $1.07 27.15

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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for PC Connection and EMC, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PC Connection 0 0 1 0 3.00
EMC 0 3 1 0 2.25

PC Connection presently has a consensus target price of $33.00, suggesting a potential upside of 34.15%. Given PC Connection’s stronger consensus rating and higher probable upside, research analysts clearly believe PC Connection is more favorable than EMC.

Institutional and Insider Ownership

40.7% of PC Connection shares are owned by institutional investors. Comparatively, 79.9% of EMC shares are owned by institutional investors. 57.3% of PC Connection shares are owned by company insiders. Comparatively, 0.4% of EMC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares PC Connection and EMC’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%
EMC 10.47% 10.66% 5.47%

Volatility & Risk

PC Connection has a beta of 1.63, meaning that its share price is 63% more volatile than the S&P 500. Comparatively, EMC has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Summary

PC Connection beats EMC on 10 of the 13 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 EMC

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.

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