Karat Packaging (NASDAQ:KRT) & WESCO International (NYSE:WCC) Critical Comparison

Karat Packaging (NASDAQ:KRT) and WESCO International (NYSE:WCC) are both industrials companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.

Institutional and Insider Ownership

25.2% of Karat Packaging shares are owned by institutional investors. Comparatively, 93.8% of WESCO International shares are owned by institutional investors. 57.9% of Karat Packaging shares are owned by company insiders. Comparatively, 2.6% of WESCO International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Karat Packaging and WESCO International”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Karat Packaging	$467.74 million	2.00	$31.48 million	$2.50	18.78
WESCO International	$23.51 billion	0.74	$640.20 million	$14.47	24.68

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

Analyst Ratings

This is a summary of current recommendations for Karat Packaging and WESCO International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Karat Packaging	1	2	3	0	2.33
WESCO International	0	1	6	1	3.00

Karat Packaging presently has a consensus target price of $36.50, suggesting a potential downside of 22.24%. WESCO International has a consensus target price of $394.17, suggesting a potential upside of 10.39%. Given WESCO International’s stronger consensus rating and higher possible upside, analysts plainly believe WESCO International is more favorable than Karat Packaging.

Dividends

Karat Packaging pays an annual dividend of $1.88 per share and has a dividend yield of 4.0%. WESCO International pays an annual dividend of $2.00 per share and has a dividend yield of 0.6%. Karat Packaging pays out 75.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WESCO International pays out 13.8% of its earnings in the form of a dividend. Karat Packaging has raised its dividend for 2 consecutive years and WESCO International has raised its dividend for 2 consecutive years.

Profitability

This table compares Karat Packaging and WESCO International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Karat Packaging	10.18%	30.62%	16.67%
WESCO International	2.84%	14.95%	4.45%

Risk & Volatility

Karat Packaging has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, WESCO International has a beta of 1.53, meaning that its stock price is 53% more volatile than the S&P 500.

Summary

WESCO International beats Karat Packaging on 11 of the 17 factors compared between the two stocks.

About Karat Packaging

Karat Packaging Inc., together with its subsidiaries, engages in the manufacture and distribution of single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. It provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand. The company also provides new product development, design, printing, and logistics services. It offers its products to national and regional distributors, restaurant chains, retail establishments, and online customers. The company was founded in 2000 and is based in Chino, California.

About WESCO International

WESCO International, Inc. provides business-to-business distribution, logistics services, and supply chain solutions in the United States, Canada, and internationally. It operates through three segments: Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility and Broadband Solutions (UBS). The EES segment supplies products and supply chain solutions, including electrical equipment and supplies, automation and connected devices, security, lighting, wire and cable, and safety, as well as maintenance, repair, and operating (MRO) products. This segment also offers contractor solutions, direct and indirect manufacturing supply chain optimization programs, lighting and renewables advisory services, and digital and automation solutions. The CSS segment operates in the network infrastructure and security markets. This segment sells products directly to end-users or through various channels, including data communications contractors, security, network, professional audio/visual, and systems integrators. It also provides safety and energy management solutions. The UBS segment offers products and services to investor-owned utilities; public power companies; and service and wireless providers, broadband operators, and contractors. This segment's products include wire and cables, transformers, transmission and distribution hardware, switches, protective devices, connectors, conduits, pole line hardware, racks, cabinets, safety and MRO products, and point-to-point wireless devices. This segment also offers various service solutions, including fiber project management, high and medium voltage project design and support, pre-wired meters and capacitor banks, meter testing and metering infrastructure installation, personal protective equipment dielectric testing, and tool repair, as well as emergency response, storage yard, materials, and logistics management. The company was founded in 1922 and is headquartered in Pittsburgh, Pennsylvania.