CTS (NYSE:CTS) versus Arrow Electronics (NYSE:ARW) Critical Contrast

Arrow Electronics (NYSE:ARW) and CTS (NYSE:CTS) are both technology companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Earnings and Valuation

This table compares Arrow Electronics and CTS”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Electronics	$30.85 billion	0.32	$571.27 million	$19.73	9.78
CTS	$570.86 million	3.01	$65.32 million	$2.53	23.80

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

Institutional & Insider Ownership

99.3% of Arrow Electronics shares are held by institutional investors. Comparatively, 96.9% of CTS shares are held by institutional investors. 0.8% of Arrow Electronics shares are held by company insiders. Comparatively, 2.4% of CTS shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Arrow Electronics and CTS, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Electronics	1	2	3	0	2.33
CTS	0	1	3	0	2.75

Arrow Electronics presently has a consensus target price of $228.25, indicating a potential upside of 18.34%. CTS has a consensus target price of $73.50, indicating a potential upside of 22.05%. Given CTS’s stronger consensus rating and higher probable upside, analysts plainly believe CTS is more favorable than Arrow Electronics.

Profitability

This table compares Arrow Electronics and CTS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrow Electronics	2.62%	15.84%	2.97%
CTS	12.94%	14.05%	10.10%

Volatility & Risk

Arrow Electronics has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500. Comparatively, CTS has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Summary

CTS beats Arrow Electronics on 7 of the 13 factors compared between the two stocks.

About Arrow Electronics

Arrow Electronics, Inc. is a global distributor of electronic components and enterprise computing products and services. The company connects manufacturers with components and technology solutions, supporting customers from product design and development through production and supply chain management. Through its global components business, Arrow supplies semiconductors and other electronic components, along with engineering and supply chain services. Its enterprise computing solutions business distributes technology such as data center, cloud, security and networking products, and provides related services to resellers and other customers.

About CTS

CTS Corporation designs and manufactures sensors, actuators and other electronic components for customers in a range of industries. Its products include frequency-control devices, connectivity components and electronic assemblies, as well as sensing and motion-control solutions. The company’s products are used in applications such as automotive systems, industrial equipment, medical devices, communications and aerospace and defense. CTS serves customers globally, with operations and business activities across multiple regions.