ScanSource (SCSC) & Allegion (ALLE) Critical Comparison

ScanSource (NASDAQ: SCSC) and Allegion (NYSE:ALLE) are both industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, analyst recommendations, valuation and profitability.

Profitability

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

Net Margins Return on Equity Return on Assets
ScanSource 1.18% 9.06% 4.17%
Allegion 11.35% 126.46% 15.98%

Analyst Ratings

This is a breakdown of current ratings and price targets for ScanSource and Allegion, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ScanSource 0 1 0 0 2.00
Allegion 0 1 5 0 2.83

Allegion has a consensus target price of $95.20, indicating a potential upside of 14.75%. Given Allegion’s stronger consensus rating and higher probable upside, analysts plainly believe Allegion is more favorable than ScanSource.

Dividends

Allegion pays an annual dividend of $0.84 per share and has a dividend yield of 1.0%. ScanSource does not pay a dividend. Allegion pays out 29.5% of its earnings in the form of a dividend. Allegion has increased its dividend for 2 consecutive years.

Volatility & Risk

ScanSource has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, Allegion has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500.

Insider and Institutional Ownership

96.4% of ScanSource shares are owned by institutional investors. Comparatively, 92.2% of Allegion shares are owned by institutional investors. 2.4% of ScanSource shares are owned by insiders. Comparatively, 0.6% of Allegion shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares ScanSource and Allegion’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ScanSource $3.57 billion 0.23 $69.24 million $1.70 19.24
Allegion $2.41 billion 3.28 $273.30 million $2.85 29.11

Allegion has lower revenue, but higher earnings than ScanSource. ScanSource is trading at a lower price-to-earnings ratio than Allegion, indicating that it is currently the more affordable of the two stocks.

Summary

Allegion beats ScanSource on 13 of the 17 factors compared between the two stocks.

About ScanSource

ScanSource, Inc. is a provider of technology products and solutions. The Company and its subsidiaries provide solutions for technology manufacturers and sell to resellers in technology markets, such as point-of-sale (POS) and Barcode, Networking and Security, Communications and Emerging Technologies. It operates through two segments: Worldwide Barcode & Security and Worldwide Communications & Services. The Barcode & Security distribution segment focuses on automatic identification and data capture (AIDC), POS, electronic physical security and three dimensional (3D) printing technologies. The Communications & Services distribution segment focuses on communications technologies and services. As of June 30, 2016, the Company marketed over 100,000 products from approximately 400 hardware and software vendors to approximately 35,000 reseller customers from distribution centers in Mississippi, Virginia, Florida, Mexico, Colombia, Brazil, Belgium, France, Germany and the United Kingdom.

About Allegion

Allegion Public Limited Company is a provider of security products and solutions. The Company offers a portfolio of mechanical and electronic security products across a range of brands. Its segments include Americas; Europe, Middle East, India and Africa (EMEIA), and Asia Pacific. Its products include door closers and controls; door and door frames (steel); electronic security products; electronic and biometric access control systems; exit devices; locks, locksets, portable locks and key systems; time, attendance and workforce productivity systems, and other accessories. It sells a range of security products and solutions for end users in commercial, institutional and residential facilities across the world, including into the education, healthcare, government, hospitality, commercial office and single and multi-family residential markets. As of December 31, 2016, it manufactured and sold mechanical and electronic security products and solutions in approximately 130 countries.

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