Contrasting ScanSource (SCSC) and PC Connection (CNXN)

PC Connection (NASDAQ: CNXN) and ScanSource (NASDAQ:SCSC) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.

Analyst Recommendations



This is a breakdown of recent ratings for PC Connection and ScanSource, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PC Connection 0 0 1 0 3.00
ScanSource 0 2 0 0 2.00

PC Connection currently has a consensus target price of $33.00, indicating a potential upside of 27.66%. ScanSource has a consensus target price of $48.50, indicating a potential upside of 30.20%. Given ScanSource’s higher possible upside, analysts plainly believe ScanSource is more favorable than PC Connection.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
PC Connection $2.69 billion 0.26 $48.11 million $1.77 14.60
ScanSource $3.57 billion 0.27 $69.24 million $2.30 16.20

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

Volatility & Risk

PC Connection has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500. Comparatively, ScanSource has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.

Institutional & Insider Ownership

41.4% of PC Connection shares are held by institutional investors. Comparatively, 93.4% of ScanSource shares are held by institutional investors. 57.3% of PC Connection shares are held by insiders. Comparatively, 2.4% of ScanSource shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
PC Connection 1.63% 11.00% 7.06%
ScanSource 1.65% 8.78% 4.13%

About PC Connection

PC Connection, Inc. is a provider of a range of information technology (IT) solutions. The Company conducts its business operations through three business segments: small- to medium-sized businesses (SMB), Large Account and Public Sector. The Company enables customers to design, enable, manage and service their IT environments. The Company’s IT products include computer systems, software and peripheral equipment, networking communications, and other products and accessories that the Company purchases from manufacturers, distributors and other suppliers. The Company also offers services involving design, configuration and implementation of IT solutions. The Company markets its products and services through its Websites, including www.connection.com, www.connection.com/enterprise, www.connection.com/publicsector, and www.macconnection.com. It uses a combination of outbound telemarketing, including some on-site sales solicitation by business development managers.

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.

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