ScanSource (NASDAQ:SCSC – Get Free Report) and Cemtrex (NASDAQ:CETX – Get Free Report) are both small-cap technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.
Insider & Institutional Ownership
97.9% of ScanSource shares are owned by institutional investors. Comparatively, 2.0% of Cemtrex shares are owned by institutional investors. 3.2% of ScanSource shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Analyst Recommendations
This is a summary of recent ratings and target prices for ScanSource and Cemtrex, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ScanSource | 0 | 3 | 1 | 0 | 2.25 |
| Cemtrex | 1 | 0 | 0 | 0 | 1.00 |
ScanSource currently has a consensus target price of $51.00, suggesting a potential upside of 2.79%. Given ScanSource’s stronger consensus rating and higher possible upside, analysts plainly believe ScanSource is more favorable than Cemtrex.
Earnings and Valuation
This table compares ScanSource and Cemtrex”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| ScanSource | $3.23 billion | 0.31 | $78.87 million | $3.66 | 13.56 |
| Cemtrex | $71.17 million | 0.02 | -$28.11 million | ($81.19) | -0.01 |
ScanSource has higher revenue and earnings than Cemtrex. Cemtrex is trading at a lower price-to-earnings ratio than ScanSource, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares ScanSource and Cemtrex’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ScanSource | 2.44% | 10.10% | 5.11% |
| Cemtrex | -38.59% | -129.15% | -45.98% |
Volatility and Risk
ScanSource has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500. Comparatively, Cemtrex has a beta of 2.15, suggesting that its share price is 115% more volatile than the S&P 500.
Summary
ScanSource beats Cemtrex on 13 of the 14 factors compared between the two stocks.
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.
About Cemtrex
Cemtrex, Inc. engages in the provision of solutions in the technology industry. It operates through the following segments: Security, Industrial Services, and Cemtrex Corporate. The Security segment provides end-to-end security solutions to meet corporate, industrial, and governmental security challenges. The Industrial Services segment offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers. The Cemtrex Corporate segment refers to the holding company of the other two segments. The company was founded on April 27, 1998 and is headquartered in Hauppauge, NY.
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