CTS (NYSE:CTS) vs. CDW (NASDAQ:CDW) Critical Contrast

CDW (NASDAQ:CDW) and CTS (NYSE:CTS) are both technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CDW	4.48%	52.23%	7.71%
CTS	12.94%	14.05%	10.10%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for CDW and CTS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CDW	0	3	5	1	2.78
CTS	0	1	3	0	2.75

CDW presently has a consensus price target of $167.38, suggesting a potential downside of 3.30%. CTS has a consensus price target of $73.50, suggesting a potential upside of 18.12%. Given CTS’s higher possible upside, analysts plainly believe CTS is more favorable than CDW.

Valuation & Earnings

This table compares CDW and CTS”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CDW	$22.42 billion	0.96	$1.07 billion	$8.57	20.20
CTS	$570.86 million	3.11	$65.32 million	$2.53	24.59

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

Dividends

CDW pays an annual dividend of $2.52 per share and has a dividend yield of 1.5%. CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. CDW pays out 29.4% of its earnings in the form of a dividend. CTS pays out 6.3% 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. CDW has raised its dividend for 10 consecutive years. CDW is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

CDW has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, CTS has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.

Insider & Institutional Ownership

93.2% of CDW shares are owned by institutional investors. Comparatively, 96.9% of CTS shares are owned by institutional investors. 0.8% of CDW shares are owned by company insiders. Comparatively, 2.4% of CTS shares are owned by company 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.

About CDW

CDW Corporation is a provider of information technology products and services to businesses, government agencies, educational institutions and healthcare organizations. The company helps customers select, purchase, implement and manage technology solutions. Its offerings include computers and other hardware, software, cloud services, cybersecurity, networking, data center infrastructure and collaboration tools. CDW also provides consulting, integration and ongoing technology support, helping customers plan and operate their IT environments.

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.