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For the first time since 2008, the economic slowdown isn't happening in North America. While ScanSource, Inc. (SCSC - Free Report) saw record fiscal first quarter sales in October, it also saw Europe weakening. Now, as this Zacks #2 Rank (Buy) is set to report second quarter results, will Europe be even more of a drag?

ScanSource distributes specialty technology products around the world in two segments: North America and International. The International segment includes Latin America, and Mexico, as well as Europe.

It distributes automatic identification and data capture (AIDC) and point-of-sale (POS) solutions through its ScanSources POS & Barcoding sales unit. Its Catalyst unit distributes voice, video and converged communications equipment.

Record Sales in the First Quarter of 2012

On Oct 27, ScanSource reported fiscal first quarter 2012 results which saw revenue hit a record $770.3 million, up 21.4% from the fiscal first quarter of 2011.

North America had another strong performance which compensated for the weakness in the European business. Excluding the acquisition of CDC Brasil, its international growth rate slowed to just 9% over the year ago period.

Earnings per share were 69 cents, which beat the Zacks Consensus Estimate by 5 cents. The company made just 58 cents in the first quarter a year ago.

Second Quarter Outlook

In October, the company wasn't looking for much growth in the second quarter.

Revenue was expected in the range of $755 million to $775 million, which would put it about where it was in the first quarter.

Similarly, earnings per share are forecast between 64 and 67 cents.

Analysts are more bullish than the company. The Zacks Consensus Estimate is calling for 69 cents, or 2 cents higher than the top end of the guidance range.

Double Digit Earnings Growth in Fiscal 2012

Analysts are still optimistic about the full fiscal year. 3 estimates have moved higher for 2012 in the last 30 days which has pushed the full year Zacks Consensus to $3.14 from $3.08 per share.

That is earnings growth of 15.3%.

ScanSource is a Value Stock

Shares sold off like the rest of the market in the summer of 2011 but have staged nearly a full turnaround.

But there is still value. The company is trading with a forward P/E of 13.8, which is under the 15x cut-off I use for value stocks.

ScanSource also has a value price-to-book ratio of 1.7. A P/B ratio under 3.0 usually indicates "value."

Even more impressive, the company has a really low price-to-sales ratio of only 0.4. A P/S ratio under 1.0 can mean a company is undervalued.

ScanSource is scheduled to report second quarter earnings on Jan 26. Will North America continue to pick up the slack for a slowing Europe? Stay tuned.

This Week's Value Zacks Rank Buy Stocks

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The U.S. domestic energy explorers are in the drivers seat. Unit Corporation (UNT) is expected to grow earnings by the double digits again in 2012 after posting double digit growth in 2011. This Zacks #1 Rank (Strong Buy) also has value to go along with the growth as it trades with a forward P/E of just 9.3. Read the full article.

Prestige Brands Holdings, Inc. (PBH) recently made the largest acquisition in its history, buying 17 over-the-counter drug brands from GlaxoSmithKline for $660 million. This Zacks #1 Rank (Strong Buy) has a forward P/E of just 11.8. Read the full article.

It's a great time to be in the oil drilling services business. Weatherford International Inc. (WFT) reported record revenue in the third quarter as earnings jumped 136%. Yet this Zacks #1 Rank (Strong Buy) has cheap valuations, with a P/B ratio of just 1.2. Read the full article.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

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