Comparing ScanSource (SCSC) and Tech Data (TECD)

ScanSource (NASDAQ: SCSC) and Tech Data (NASDAQ:TECD) are both industrial products companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Analyst Recommendations

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This is a breakdown of current recommendations and price targets for ScanSource and Tech Data, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ScanSource 0 0 1 0 3.00
Tech Data 0 2 6 0 2.75

ScanSource currently has a consensus price target of $43.00, suggesting a potential upside of 28.36%. Tech Data has a consensus price target of $110.29, suggesting a potential upside of 42.16%. Given Tech Data’s higher probable upside, analysts plainly believe Tech Data is more favorable than ScanSource.

Risk & Volatility

ScanSource has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Tech Data has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Profitability

This table compares ScanSource and Tech Data’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%
Tech Data 0.32% 12.83% 3.06%

Insider and Institutional Ownership

96.4% of ScanSource shares are held by institutional investors. Comparatively, 96.2% of Tech Data shares are held by institutional investors. 2.4% of ScanSource shares are held by insiders. Comparatively, 1.6% of Tech Data shares are held by 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.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ScanSource $3.57 billion 0.24 $69.24 million $2.75 12.18
Tech Data $36.78 billion 0.08 $116.64 million $9.11 8.52

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

Summary

ScanSource beats Tech Data on 8 of the 14 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 Tech Data

Tech Data Corporation is a wholesale distributor of technology products. The Company serves as a link in the technology supply chain by bringing products from the technology vendors to market, as well as providing its customers with logistics capabilities and services. It operates through the segment of distributing technology products, logistics management and other value-added services. It operates in two geographic segments: the Americas and Europe. It provides resellers training and technical support suite of electronic commerce tools customized shipping documents product configuration or integration services and access to financing programs. Its customers include value-added resellers, direct marketers, retailers and corporate resellers who support the diverse technology needs of end users. It sells its products to customers in approximately 100 countries throughout North America, South America, Europe, the Middle East and Africa.

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