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

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WESCO International	$23.51 billion	0.73	$640.20 million	$14.47	24.24
Karat Packaging	$467.74 million	2.06	$31.48 million	$2.50	19.36

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.

Volatility & Risk

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

Dividends

WESCO International pays an annual dividend of $2.00 per share and has a dividend yield of 0.6%. Karat Packaging pays an annual dividend of $1.88 per share and has a dividend yield of 3.9%. WESCO International pays out 13.8% of its earnings in the form of a dividend. 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 has raised its dividend for 2 consecutive years and Karat Packaging has raised its dividend for 2 consecutive years.

Profitability

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

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

Institutional & Insider Ownership

93.8% of WESCO International shares are owned by institutional investors. Comparatively, 25.2% of Karat Packaging shares are owned by institutional investors. 2.6% of WESCO International shares are owned by company insiders. Comparatively, 57.9% of Karat Packaging shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for WESCO International and Karat Packaging, as reported by MarketBeat.com.

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

WESCO International currently has a consensus target price of $394.17, indicating a potential upside of 12.37%. Karat Packaging has a consensus target price of $36.50, indicating a potential downside of 24.57%. Given WESCO International’s stronger consensus rating and higher possible upside, research analysts plainly believe WESCO International is more favorable than Karat Packaging.

Summary

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

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.

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.