Critical Review: 21Vianet Group (VNET) versus CDW Corporation (CDW)

21Vianet Group (NASDAQ: VNET) and CDW Corporation (NASDAQ:CDW) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitabiliy.

Dividends

CDW Corporation pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. 21Vianet Group does not pay a dividend. CDW Corporation pays out 26.2% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations for 21Vianet Group and CDW Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
21Vianet Group 1 2 0 0 1.67
CDW Corporation 0 2 6 1 2.89

21Vianet Group presently has a consensus target price of $7.20, indicating a potential upside of 31.87%. CDW Corporation has a consensus target price of $60.56, indicating a potential downside of 2.22%. Given 21Vianet Group’s higher probable upside, equities research analysts plainly believe 21Vianet Group is more favorable than CDW Corporation.

Profitability

This table compares 21Vianet Group and CDW Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
21Vianet Group -21.04% -5.49% -2.74%
CDW Corporation 2.85% 55.44% 8.01%

Volatility & Risk

21Vianet Group has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500. Comparatively, CDW Corporation has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Earnings and Valuation

This table compares 21Vianet Group and CDW Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
21Vianet Group $531.10 million 1.16 $17.71 million ($1.08) -5.06
CDW Corporation $14.19 billion 0.69 $1.08 billion $2.44 25.39

CDW Corporation has higher revenue and earnings than 21Vianet Group. 21Vianet Group is trading at a lower price-to-earnings ratio than CDW Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

21.5% of 21Vianet Group shares are owned by institutional investors. Comparatively, 90.8% of CDW Corporation shares are owned by institutional investors. 12.1% of 21Vianet Group shares are owned by insiders. Comparatively, 2.2% of CDW Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

CDW Corporation beats 21Vianet Group on 11 of the 16 factors compared between the two stocks.

About 21Vianet Group

21Vianet Group, Inc. is a carrier-neutral Internet data center services provider. The Company hosts its customers’ servers and networking equipment and provides interconnectivity. The Company also provides managed network services to enable customers to deliver data across the Internet through its data transmission network and smart routing technology. The Company provides value-added services, such as content delivery network (CDN) services, virtual private network (VPN) services and last-mile wired broadband services. It offers public cloud services, private cloud and hybrid services. In addition, the Company also offers container-based data center service. The Company’s service offerings include hosting and related services, and managed network services. The Company provides hosting and related services to house servers and networking equipment in its data centers and connects them through its data transmission network, and offers other hosting related value-added services.

About CDW Corporation

CDW Corporation (CDW) is a provider of integrated information technology (IT) solutions in the United States, Canada and the United Kingdom. The Company’s segments include Corporate, Public and Other. The Corporate segment consists of private sector business customers in the United States based on employee size between Medium/Large customers, which primarily includes organizations with more than 100 employees, and Small Business customers, which primarily includes organizations with up to 100 employees. Its Public segment comprises government agencies and education and healthcare institutions in the United States. Its Other segment includes Canada and CDW UK. The CDW Advanced Services business consists primarily of customized engineering services delivered by technology specialists and engineers, and managed services that include Infrastructure as a Service (IaaS) offerings. The Company has centralized logistics and headquarters functions that provide services to the segments.

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