Financial Review: TESSCO Technologies (TESS) vs. West Corp (WSTC)

TESSCO Technologies (NASDAQ: TESS) and West Corp (NASDAQ:WSTC) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Dividends

TESSCO Technologies pays an annual dividend of $0.80 per share and has a dividend yield of 5.0%. West Corp pays an annual dividend of $0.45 per share and has a dividend yield of 1.9%. TESSCO Technologies pays out 235.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. West Corp pays out 17.9% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent recommendations and price targets for TESSCO Technologies and West Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TESSCO Technologies 0 0 0 0 N/A
West Corp 0 5 0 0 2.00

West Corp has a consensus target price of $24.50, suggesting a potential upside of 4.26%. Given West Corp’s higher possible upside, analysts plainly believe West Corp is more favorable than TESSCO Technologies.

Volatility and Risk

TESSCO Technologies has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, West Corp has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500.

Insider and Institutional Ownership

58.5% of TESSCO Technologies shares are held by institutional investors. Comparatively, 67.4% of West Corp shares are held by institutional investors. 26.9% of TESSCO Technologies shares are held by insiders. Comparatively, 4.6% of West Corp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares TESSCO Technologies and West Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TESSCO Technologies 0.51% 3.09% 1.85%
West Corp 7.79% N/A 5.18%

Valuation & Earnings

This table compares TESSCO Technologies and West Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TESSCO Technologies $544.45 million 0.25 $7.18 million $0.34 46.91
West Corp $2.29 billion 0.86 $636.33 million $2.51 9.36

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

Summary

West Corp beats TESSCO Technologies on 10 of the 14 factors compared between the two stocks.

TESSCO Technologies Company Profile

TESSCO Technologies Incorporated architects and delivers the product and value chain solutions to organizations responsible for building, operating, maintaining and reselling cellular, mobile communications, wireless-fidelity (Wi-Fi), machine-to-machine, Internet of Things and wireless backhaul systems. The Company provides marketing and sales services, knowledge and supply chain management, product-solution delivery and control systems utilizing Internet and information technology. Its customers include a diversified mix of carrier and public network operators, tower owners, program managers, contractors and integrators, wireless Internet service providers, industrial and enterprise self-maintained users (including railroads, utilities, mining operators, oil and gas operators and technicians), governments, manufacturers, value-added resellers, tier 1, 2 and 3 retail carrier stores and their independent agents, dealers and consumers, as well as other local and national retailers.

West Corp Company Profile

West Corporation is a provider of communication and network infrastructure services. The Company helps its clients communicate, collaborate and connect with their audiences through a portfolio of solutions that include unified communications services, safety services, and interactive services, such as automated notifications, specialized agent services and telecom services. The Company’s segments include Unified Communications Services, which includes collaboration services, Unified Communications as a Service (UCaaS) and telecom services; Safety Services, which includes carrier services, government solutions and advanced services; Interactive Services, including outbound (proactive notifications-voice, text/short messaging service (SMS) and chat), inbound speech solutions (interactive voice response or IVR), Web, mobile and professional services, and Specialized Agent Services, which includes healthcare advocacy services, cost management services and revenue generation.

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