Critical Survey: ScanSource (NASDAQ:SCSC) & Global Industrial (NYSE:GIC)

Global Industrial (NYSE:GIC) and ScanSource (NASDAQ:SCSC) are both small-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Insider and Institutional Ownership

31.2% of Global Industrial shares are owned by institutional investors. Comparatively, 97.9% of ScanSource shares are owned by institutional investors. 64.2% of Global Industrial shares are owned by company insiders. Comparatively, 3.2% of ScanSource shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Global Industrial and ScanSource”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Global Industrial	$1.32 billion	0.83	$61.00 million	$1.75	16.13
ScanSource	$3.04 billion	0.30	$71.55 million	$3.21	12.78

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Global Industrial	5.11%	22.85%	12.11%
ScanSource	2.48%	9.72%	5.08%

Risk and Volatility

Global Industrial has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, ScanSource has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Global Industrial and ScanSource, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Global Industrial	1	1	0	0	1.50
ScanSource	0	3	1	0	2.25

ScanSource has a consensus target price of $42.50, indicating a potential upside of 3.62%. Given ScanSource’s stronger consensus rating and higher possible upside, analysts clearly believe ScanSource is more favorable than Global Industrial.

Summary

ScanSource beats Global Industrial on 8 of the 14 factors compared between the two stocks.

About Global Industrial

Global Industrial Company operates as an industrial distributor of various industrial and maintenance, repair, and operation (MRO) products in North America. It offers storage and shelving, safety and security, carts and trucks, HVAC and fans, furniture and decor, material handling, janitorial and facility maintenance, workbenches and shop desks, tools and instruments, plumbing and pumps, office and school supplies, packaging and shipping, lighting and electrical, foodservice and retail, medical and laboratory, motors and power transmission, building supplies, machining, fasteners and hardware, vehicle maintenance, and raw materials. The company offers industrial and MRO products under the Global, GlobalIndustrial.com, Nexel, Paramount, Interion, and Absocold trademarks. It serves businesses; state, local, and private educational organizations; and government entities through relationship marketers, e-commerce sites, signature campaigns, and catalogs. The company was formerly known as Systemax Inc. Global Industrial Company was founded in 1949 and is headquartered in Port Washington, New York.

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.