Financial Analysis: Arrow Electronics (NYSE:ARW) & WESCO International (NYSE:WCC)

Arrow Electronics (NYSE:ARW) and WESCO International (NYSE:WCC) are both mid-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Insider and Institutional Ownership

99.3% of Arrow Electronics shares are owned by institutional investors. Comparatively, 93.8% of WESCO International shares are owned by institutional investors. 1.0% of Arrow Electronics shares are owned by company insiders. Comparatively, 3.3% of WESCO International shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Electronics	$27.92 billion	0.24	$392.07 million	$7.26	17.49
WESCO International	$21.82 billion	0.41	$717.60 million	$13.22	13.78

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

Analyst Ratings

This is a summary of current recommendations for Arrow Electronics and WESCO International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Electronics	2	1	1	0	1.75
WESCO International	0	1	7	1	3.00

Arrow Electronics currently has a consensus target price of $115.75, suggesting a potential downside of 8.84%. WESCO International has a consensus target price of $212.63, suggesting a potential upside of 16.76%. Given WESCO International’s stronger consensus rating and higher possible upside, analysts plainly believe WESCO International is more favorable than Arrow Electronics.

Risk and Volatility

Arrow Electronics has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, WESCO International has a beta of 1.83, indicating that its stock price is 83% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arrow Electronics	1.40%	8.97%	2.52%
WESCO International	3.30%	13.40%	4.37%

Summary

WESCO International beats Arrow Electronics on 12 of the 15 factors compared between the two stocks.

About Arrow Electronics

Arrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Global Components and Global Enterprise Computing Solutions. The Global Components segment markets and distributes electronic components comprising semiconductor products and related services; interconnect, passive, and electromechanical products, including capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products, as well as other products and services. The Global Enterprise Computing Solutions segment offers computing solutions, such as datacenter, cloud, security, and analytics solutions. This segment also provides access to various services, including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. The company serves original equipment manufacturers, value-added resellers, managed service providers, contract manufacturers, and other commercial customers. Arrow Electronics, Inc. was founded in 1935 and is based in Centennial, Colorado.

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.