Critical Survey: Richardson Electronics (RELL) and TE Connectivity (TE…


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

Profitability

This table compares Richardson Electronics and TE Connectivity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Richardson Electronics 2.56% 2.12% 1.76%
TE Connectivity 17.69% 20.06% 10.22%

Dividends

Richardson Electronics pays an annual dividend of $0.24 per share and has a dividend yield of 3.3%. TE Connectivity pays an annual dividend of $1.76 per share and has a dividend yield of 2.3%. TE Connectivity pays out 31.4% of its earnings in the form of a dividend. TE Connectivity has increased its dividend for 7 consecutive years.

Risk and Volatility

Richardson Electronics has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500. Comparatively, TE Connectivity has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Richardson Electronics and TE Connectivity, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Richardson Electronics 0 0 0 0 N/A
TE Connectivity 0 3 9 0 2.75

TE Connectivity has a consensus price target of $108.30, suggesting a potential upside of 40.78%. Given TE Connectivity’s higher possible upside, analysts clearly believe TE Connectivity is more favorable than Richardson Electronics.

Institutional and Insider Ownership

43.5% of Richardson Electronics shares are held by institutional investors. Comparatively, 89.0% of TE Connectivity shares are held by institutional investors. 35.6% of Richardson Electronics shares are held by company insiders. Comparatively, 0.7% of TE Connectivity shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Richardson Electronics and TE Connectivity’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Richardson Electronics $163.21 million 0.57 $3.82 million N/A N/A
TE Connectivity $13.99 billion 1.89 $2.57 billion $5.61 13.71

TE Connectivity has higher revenue and earnings than Richardson Electronics.

Summary

TE Connectivity beats Richardson Electronics on 11 of the 15 factors compared between the two stocks.

Richardson Electronics Company Profile

Richardson Electronics, Ltd. engages in power and microwave technologies, customized display solutions, and healthcare equipment businesses in North America, the Asia Pacific, Europe, and Latin America. The company’s Power and Microwave Technologies Group segment provides engineered solutions, power grid and microwave tubes, and related consumables; high value flat panel detector solutions, replacement parts, tubes and service training for diagnostic imaging equipment; and customized display solutions, as well as power conversion and RF and microwave components for broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar, and radiation oncology applications. Its products are used to control, switch, or amplify electrical power signals, as well as are used as display devices in alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. This segment also offers technical services for microwave and industrial equipment. The company’s Canvys segment provides custom display solutions, such as touch screens, protective panels, custom enclosures, specialized cabinet finishes, application specific software packages, and certification services to corporate enterprise, financial, healthcare, industrial, and medical original equipment manufacturer markets. Its Healthcare segment manufactures, refurbishes, and distributes diagnostic imaging replacement parts, including CT and MRI systems and tubes, hydrogen thyratrons, klystrons, and magnetrons; flat panel detector upgrades; and additional replacement solutions. This segment serves hospitals, medical centers, asset management companies, independent service organizations, and multi-vendor service providers. The company was founded in 1947 and is headquartered in LaFox, Illinois.

TE Connectivity Company Profile

TE Connectivity Ltd., together with its subsidiaries, engages in the design, manufacture, and sale of connectivity and sensors solutions in the Americas, Europe, the Middle East, Africa, and the Asia–Pacific. The company operates through three segments: Transportation Solutions, Industrial Solutions, and Communications Solutions. The Transportation Solutions segment primarily provides terminals and connector systems and components, sensors, and relays, as well as application tooling, wires, and heat shrink tubing for use in the automotive, commercial transportation, and sensor markets. The Industrial Solutions segment offers terminals and connector systems and components; heat shrink tubing; relays; and wires and cables for industrial equipment, aerospace, defense, oil and gas, and energy markets. The Communications Solutions segment supplies electronic components, such as terminals and connector systems and components, undersea telecommunication systems, antennas, relays, and heat shrink tubing for the data and devices, subsea communications, and appliances markets. TE Connectivity Ltd. offers its products to approximately 150 countries primarily through direct selling to manufacturers, as well as through online TE store and third-party distributors. The company was formerly known as Tyco Electronics Ltd. and changed its name to TE Connectivity Ltd. in March 2011. TE Connectivity Ltd. was incorporated in 2000 and is based in Schaffhausen, Switzerland.

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