Netlist (OTCMKTS:NLST) and ScanSource (NASDAQ:SCSC) Financial Analysis

Netlist (OTCMKTS:NLST) and ScanSource (NASDAQ:SCSC) are both small-cap technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Analyst Ratings

This is a summary of current ratings and price targets for Netlist and ScanSource, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Netlist	0	1	1	0	2.50
ScanSource	0	3	0	0	2.00

Netlist currently has a consensus target price of $5.00, indicating a potential upside of 27.55%. ScanSource has a consensus target price of $43.00, indicating a potential downside of 21.75%. Given Netlist’s stronger consensus rating and higher probable upside, research analysts plainly believe Netlist is more favorable than ScanSource.

Valuation & Earnings

This table compares Netlist and ScanSource”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Netlist	$188.63 million	6.94	-$24.82 million	N/A	N/A
ScanSource	$3.04 billion	0.37	$71.55 million	$3.30	16.65

ScanSource has higher revenue and earnings than Netlist.

Profitability

This table compares Netlist and ScanSource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Netlist	0.24%	-29.40%	1.22%
ScanSource	2.38%	9.35%	4.82%

Risk and Volatility

Netlist has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, ScanSource has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500.

Institutional & Insider Ownership

0.0% of Netlist shares are held by institutional investors. Comparatively, 97.9% of ScanSource shares are held by institutional investors. 5.1% of Netlist shares are held by company insiders. Comparatively, 3.2% of ScanSource shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

ScanSource beats Netlist on 7 of the 12 factors compared between the two stocks.

About Netlist

Netlist, Inc. designs, manufactures, and markets memory subsystems for the server, high-performance computing, and communications markets in the United States and internationally. The company portfolio of proprietary technologies and design techniques, includes efficient planar design, alternative packaging techniques, and custom semiconductor logic, to deliver memory subsystems; and sells specialty memory modules and flash-based products for use in data center and industrial applications. It resells component products, including solid state drive (SSD), NAND flash, and dual inline memory module (DIMM) to storage customers, appliance customers, system builders, and cloud and datacenter customers; and sells component inventory to distributors and other users of memory integrated circuits. The company markets and sells its products through a direct sales force and a network of independent sales representatives. Netlist, Inc. was incorporated in 2000 and is headquartered in Irvine, California.

About ScanSource

ScanSource, Inc. engages in the distribution of technology products and solutions in the United States, Canada, and Brazil. It operates through two segments, Specialty Technology Solutions and Modern Communications & Cloud. The Specialty Technology Solutions segment provides a portfolio of solutions primarily for enterprise mobile computing, data capture, barcode printing, point of sale (POS), payments, networking, electronic physical security, cyber security, and other technologies. This segment offers data capture and POS solutions to automate the collection, processing, and communication of information for commercial and industrial applications, including retail sales, distribution, shipping, inventory control, materials handling, warehouse management, and health care applications. It also provides electronic physical security products, such as identification, access control, video surveillance, and intrusion-related devices; networking products comprising wireless and networking infrastructure products; other software-as-a-service (SaaS) products; and engages in hardware rental activities. The Modern Communications & Cloud segment offers a portfolio of solutions primarily for communications technologies and services comprising voice, video conferencing, wireless, data networking, cybersecurity, cable, unified communications and collaboration, cloud, and technology services, as well as IP networks and other solutions for various vertical markets, such as education, healthcare, and government. The company serves manufacturing, warehouse and distribution, retail and e-commerce, hospitality, transportation and logistics, government, education and healthcare, and other industries. ScanSource, Inc. was incorporated in 1992 and is headquartered in Greenville, South Carolina.