PC Connection (NASDAQ:CNXN) vs. Advantest (OTCMKTS:ATEYY) Critical Survey

PC Connection (NASDAQ:CNXN) and Advantest (OTCMKTS:ATEYY) are both technology companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, valuation, risk and profitability.

Insider and Institutional Ownership

42.8% of PC Connection shares are held by institutional investors. Comparatively, 0.0% of Advantest shares are held by institutional investors. 56.6% of PC Connection 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 and Risk

PC Connection has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, Advantest has a beta of 2.17, suggesting that its share price is 117% more volatile than the S&P 500.

Dividends

PC Connection pays an annual dividend of $0.80 per share and has a dividend yield of 0.9%. Advantest pays an annual dividend of $0.45 per share and has a dividend yield of 0.2%. PC Connection pays out 19.8% of its earnings in the form of a dividend. Advantest pays out 9.0% 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.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PC Connection	0	1	1	0	2.50
Advantest	0	0	0	2	4.00

Earnings & Valuation

This table compares PC Connection and Advantest”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	0.76	$83.72 million	$4.05	21.42
Advantest	$7.50 billion	21.59	$2.48 billion	$4.99	44.31

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PC Connection	3.25%	11.54%	7.65%
Advantest	39.57%	67.22%	45.56%

Summary

Advantest beats PC Connection on 12 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 Advantest

Advantest Corporation manufactures and sells semiconductors, component test system products, and mechatronics related products in Japan, the Americas, Europe, and Asia. The company operates through three segments: Semiconductor and Component Test System; Mechatronics Related Business; and Services, Support and Others. The Semiconductor and Component Test System segment provides customers with test system products for the semiconductor industry and the electronic parts industry, as well as offers test systems for SoC semiconductor devices, and test systems for memory semiconductors devices. The Mechatronics Related Business segment provides test handlers; mechatronic-applied products for handling semiconductor devices; and device interfaces, which serve as interfaces with the devices that are measured, as well as nano-technology related products. The Services, Support and Others segment provides test solutions of system level testing customer solutions for the semiconductor and modules, and support services. This segment is also involved in the sale of consumables and used products, and equipment lease and other businesses. It also engages in the research and development activities and provides maintenance and support services. The company was incorporated in 1946 and is headquartered in Tokyo, Japan.