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

Dividends

Apple pays an annual dividend of $2.52 per share and has a dividend yield of 1.6%. ScanSource does not pay a dividend. Apple pays out 28.6% of its earnings in the form of a dividend. Apple has raised its dividend for 4 consecutive years.

Institutional & Insider Ownership

94.0% of ScanSource shares are owned by institutional investors. Comparatively, 60.4% of Apple shares are owned by institutional investors. 3.0% of ScanSource shares are owned by company insiders. Comparatively, 0.1% of Apple shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares ScanSource and Apple’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ScanSource $3.57 billion 0.29 $118.92 million $2.72 14.85
Apple $223.51 billion 3.61 $70.21 billion $8.80 17.74

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

Profitability

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

Net Margins Return on Equity Return on Assets
ScanSource 1.94% 8.76% 4.15%
Apple 20.87% 35.40% 14.00%

Risk & Volatility

ScanSource has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500. Comparatively, Apple has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for ScanSource and Apple, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ScanSource 0 1 0 0 2.00
Apple 0 9 39 0 2.81

ScanSource currently has a consensus target price of $48.50, indicating a potential upside of 20.05%. Apple has a consensus target price of $190.83, indicating a potential upside of 22.27%. Given Apple’s stronger consensus rating and higher possible upside, analysts plainly believe Apple is more favorable than ScanSource.

Summary

Apple beats ScanSource on 14 of the 17 factors compared between the two stocks.

ScanSource Company Profile

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.

Apple Company Profile

Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings. The Company also delivers digital content and applications through the iTunes Store, App StoreSM, iBookstoreSM, and Mac App Store. The Company distributes its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In February 2012, the Company acquired app-search engine Chomp.

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