Reviewing PC Connection (NASDAQ:CNXN) and Flex (NASDAQ:FLEX)

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

Risk & Volatility

Flex has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500. Comparatively, PC Connection has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Earnings & Valuation

This table compares Flex and PC Connection”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flex	$27.91 billion	1.44	$880.00 million	$2.59	41.94
PC Connection	$2.87 billion	0.76	$83.72 million	$3.78	22.93

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Flex	3.32%	23.15%	5.50%
PC Connection	3.21%	10.90%	7.29%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Flex and PC Connection, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flex	0	3	8	1	2.83
PC Connection	0	0	1	1	3.50

Flex currently has a consensus target price of $114.20, indicating a potential upside of 5.13%. Given Flex’s higher possible upside, analysts clearly believe Flex is more favorable than PC Connection.

Insider and Institutional Ownership

94.3% of Flex shares are held by institutional investors. Comparatively, 42.8% of PC Connection shares are held by institutional investors. 0.6% of Flex shares are held by insiders. Comparatively, 56.6% of PC Connection shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Flex beats PC Connection on 10 of the 14 factors compared between the two stocks.

About Flex

Flex Ltd. provides technology, supply chain, and manufacturing solutions in Asia, the Americas, and Europe. It operates through three segments: Flex Agility Solutions (FAS), Flex Reliability Solutions (FRS), and Nextracker. The FAS segment offers flexible supply and manufacturing system comprising communications, enterprise and cloud solution, which includes data, edge, and communications infrastructure; lifestyle solution including appliances, consumer packaging, floorcare, micro mobility, and audio; and consumer devices, such as mobile and high velocity consumer devices. Its FRS segment provides complex ramps with specialized production models and critical environments, which comprise automotive including next generation mobility, autonomous, connectivity, electrification, and smart technologies; health solutions, such as medical devices, medical equipment, and drug delivery; and industrial solutions including capital equipment, industrial devices, and renewables and grid edge. The Nextracker segment offers solar tracker and software solutions, which are used in utility-scale and ground-mounted distributed generation solar projects. In addition, it provides a broad array of services including design and engineering, component services, rapid prototyping, fulfillment, and circular economy solutions. The company was formerly known as Flextronics International Ltd. and changed its name to Flex Ltd. in September 2016. Flex Ltd. was founded in 1969 and is headquartered in Singapore.

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.