Financial Survey: PC Connection (NASDAQ:CNXN) vs. Amphenol (NYSE:APH)

PC Connection (NASDAQ:CNXN) and Amphenol (NYSE:APH) are both technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.

Institutional and Insider Ownership

42.8% of PC Connection shares are owned by institutional investors. Comparatively, 97.0% of Amphenol shares are owned by institutional investors. 56.6% of PC Connection shares are owned by insiders. Comparatively, 1.4% of Amphenol shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for PC Connection and Amphenol, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PC Connection	0	0	1	1	3.50
Amphenol	0	1	17	1	3.00

Amphenol has a consensus target price of $108.32, suggesting a potential upside of 45.05%. Given Amphenol’s higher possible upside, analysts plainly believe Amphenol is more favorable than PC Connection.

Valuation and Earnings

This table compares PC Connection and Amphenol”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PC Connection	$2.87 billion	0.70	$83.72 million	$4.05	19.54
Amphenol	$23.09 billion	7.98	$4.27 billion	$2.30	32.47

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

Dividends

PC Connection pays an annual dividend of $0.80 per share and has a dividend yield of 1.0%. Amphenol pays an annual dividend of $0.50 per share and has a dividend yield of 0.7%. PC Connection pays out 19.8% of its earnings in the form of a dividend. Amphenol pays out 21.7% 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. PC Connection has raised its dividend for 2 consecutive years. PC Connection is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PC Connection	3.25%	11.38%	7.49%
Amphenol	17.95%	42.53%	15.11%

Volatility & Risk

PC Connection has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Amphenol has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Summary

Amphenol beats PC Connection on 11 of the 17 factors compared between the two stocks.

About PC Connection

PC Connection, Inc., together with its subsidiaries, provides a range of information technology (IT) solutions. The company operates through three segments: Business Solutions, Enterprise Solutions, and Public Sector Solutions. It offers IT products, such as computer systems, software and peripheral equipment, networking communications, and other products and accessories. The company also provides services comprising design, configuration, and implementation of IT solutions. In addition, publishes Connected, a quarterly publication that provides informative articles on the latest technologies and industry trends; distributes specialty catalogs to education, healthcare, and government customers; and MacConnection that publishes a catalog for the Apple market. The company markets its products and services through its Websites, such as connection.com, connection.com/enterprise, connection.com/publicsector, and macconnection.com. It serves small to medium-sized businesses (SMBs) comprising small office/home offices customers; government and educational institutions; and medium-to-large corporate accounts through outbound telemarketing and field sales and marketing programs targeted to specific customer populations, as well as through digital, Web, and print media advertising. PC Connection, Inc. was founded in 1982 and is headquartered in Merrimack, New Hampshire.

About Amphenol

Amphenol Corporation, together with its subsidiaries, primarily designs, manufactures, and markets electrical, electronic, and fiber optic connectors in the United States, China, and internationally. It operates through three segments: Harsh Environment Solutions, Communications Solutions, and Interconnect and Sensor Systems. The company offers connectors and connector systems, including harsh environment data, power, high-speed, fiber optic, and radio frequency interconnect products; busbars and power distribution systems; and other connectors. It also provides value-add products, such as backplane interconnect systems, cable assemblies and harnesses, and cable management products; other products comprising flexible and rigid printed circuit boards, hinges, other mechanical, and production related products. In addition, the company offers consumer device, network infrastructure, and other antennas; coaxial, power, and specialty cables; and sensors and sensor-based products. It sells its products through its sales force, independent representatives, and a network of electronics distributors to original equipment manufacturers, electronic manufacturing services companies, original design manufacturers, and service providers in the automotive, broadband communication, commercial aerospace, industrial, information technology and data communication, military, mobile device, and mobile network markets. Amphenol Corporation was founded in 1932 and is headquartered in Wallingford, Connecticut.