Analyzing ePlus (PLUS) & ScanSource (SCSC)

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

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ePlus $1.33 billion 0.80 $50.55 million $3.74 20.36
ScanSource $3.57 billion 0.24 $69.24 million $2.75 12.18

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

Profitability

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

Net Margins Return on Equity Return on Assets
ePlus 4.01% 15.06% 7.34%
ScanSource 1.18% 9.06% 4.17%

Insider & Institutional Ownership

91.3% of ePlus shares are owned by institutional investors. Comparatively, 96.4% of ScanSource shares are owned by institutional investors. 3.3% of ePlus shares are owned by company insiders. Comparatively, 2.4% of ScanSource shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

ePlus has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, ScanSource has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for ePlus and ScanSource, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ePlus 0 1 1 0 2.50
ScanSource 0 0 1 0 3.00

ePlus presently has a consensus price target of $75.00, suggesting a potential downside of 1.51%. ScanSource has a consensus price target of $43.00, suggesting a potential upside of 28.36%. Given ScanSource’s stronger consensus rating and higher probable upside, analysts clearly believe ScanSource is more favorable than ePlus.

Summary

ePlus beats ScanSource on 8 of the 13 factors compared between the two stocks.

About ePlus

ePlus inc., an engineering-centric technology solutions provider, provides information technology (IT) products and services, flexible leasing and financing solutions, and enterprise supply management in the United States. It operates through two segments, Technology and Financing. The Technology segment sells IT products, such as hardware, software, maintenance, software assurance, and services; and offers advanced professional and managed services, including data center infrastructure, networking, security, cloud, and collaboration, as well as ePlus managed, professional, security, staff augmentation, server and desktop support, and project management services. This segment also offers proprietary software products comprising OneSource IT, an online Web based software portal for customers purchasing IT equipment, software, and services; OneSource Procurement, a Web-based software tool to facilitate procurement of various assets; OneSource Asset Management, a software platform for managing and tracking corporate assets consisting of vendor maintenance contracts; and OneSource DigitalPaper, a document management software application. The Financing segment specializes in financing arrangements, including direct financing, sales-type and operating leases, notes receivable, and consumption based financing arrangements, as well as underwriting and management of IT equipment and assets. Its financing operations comprise sales, pricing, credit, contracts, accounting, and risk and asset management. This segment primarily finances IT equipment, such as accessories and software, communication-related equipment, and medical equipment. The company serves commercial entities, state and local governments, government contractors, and educational institutions. The company was formerly known as MLC Holdings, Inc. and changed its name to ePlus inc. in 1999. ePlus inc. was founded in 1990 and is headquartered in Herndon, Virginia.

About ScanSource

ScanSource, Inc. distributes technology products and solutions in North America, Latin America, and Europe. The company's Worldwide Barcode, Networking & Security segment focuses on automatic identification and data capture (AIDC), point-of-sale (POS), networking, electronic physical security, 3D printing, and other specialty technologies. Its AIDC and POS products are used to automate the collection, processing, and communication of information for commercial and industrial applications, such as retail sales, distribution, shipping, inventory control, materials handling, warehouse management, and health care applications; electronic physical security products, including identification, access control, video surveillance, intrusion-related, wireless, and networking infrastructure products; and 3D printing solutions to replace and complement traditional methods, as well as reduce the time and cost of designing new products. Its Worldwide Communications & Services segment focuses on communications technologies and services. This segment provides voice and data products, such as private branch exchanges (PBX), key systems, and telephone handsets and components that are used in voice, fax, data, voice recognition, call center management, and IP communication applications; converged communication products, such as telephone and IP network interfaces, voice over Internet protocol systems, PBX integration products, and carrier-class board systems-level products; and video products comprising video and voice conferencing, and network systems. This segment also offers data networking products that include switches, servers, and routers; and provides value-added support programs and services, such as education and training, customer configuration, marketing services, network assessments, WiFi services, and partnership programs. ScanSource, Inc. was founded in 1992 and is headquartered in Greenville, South Carolina.

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