Analyzing Quantum (QTM) and PC Connection (CNXN)

Quantum (NYSE: QTM) and PC Connection (NASDAQ:CNXN) are both small-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, risk and analyst recommendations.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quantum 0 0 1 0 3.00
PC Connection 0 0 1 0 3.00

Quantum currently has a consensus price target of $10.00, indicating a potential upside of 153.81%. PC Connection has a consensus price target of $33.00, indicating a potential upside of 34.58%. Given Quantum’s higher probable upside, analysts clearly believe Quantum is more favorable than PC Connection.

Profitability

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

Net Margins Return on Equity Return on Assets
Quantum -1.77% -7.26% -0.83%
PC Connection 1.88% 10.81% 7.11%

Earnings & Valuation

This table compares Quantum and PC Connection’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Quantum $505.35 million 0.27 $3.64 million ($0.24) -16.42
PC Connection $2.91 billion 0.23 $54.86 million $2.05 11.96

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

Insider & Institutional Ownership

64.2% of Quantum shares are held by institutional investors. Comparatively, 39.9% of PC Connection shares are held by institutional investors. 8.6% of Quantum shares are held by company insiders. Comparatively, 57.3% 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 & Risk

Quantum has a beta of 2.17, suggesting that its stock price is 117% more volatile than the S&P 500. Comparatively, PC Connection has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500.

Summary

PC Connection beats Quantum on 8 of the 12 factors compared between the two stocks.

About Quantum

Quantum Corporation focuses on scale-out storage, archive and data protection, providing solutions for capturing, sharing, managing and preserving digital assets over the entire data lifecycle. The Company’s end-to-end tiered storage solutions enable users to maximize the value of their data by making it accessible whenever and wherever needed, retaining it indefinitely and reducing total cost and complexity. It works with a network of distributors, value-added resellers (VARs), direct marketing resellers (DMRs), original equipment manufacturers (OEMs) and other suppliers to meet customers’ evolving needs. Its scale-out storage portfolio includes StorNext software, appliances and full systems called StorNext Pro Solutions, as well as Xcellis workflow storage, QXS disk storage, Lattus extended online storage and Q-Cloud Archive and Vault services. Its StorNext offerings enable customers to manage large unstructured data sets in an information workflow.

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.

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