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ScanSource to Divest Non-Brazilian Latin America Businesses

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ScanSource, Inc. (SCSC - Free Report) yesterday announced that it agreed to sell its Latin American businesses that are carried outside Brazil. The buyer of these assets is Miami, FL-based Intcomex. Notably, the financial terms of the agreement have not been disclosed.

Shares of ScanSource increased 3.64% yesterday, ending the trading session at $25.31 per share.

Intcomex provides multiple products in various countries, including mobile devices, computer equipment, networking products, software, security products, digital consumer electronics and others. In addition, it offers various services like technical, financial and guarantee.

Discussion on Divestment

As noted, the businesses to be divested by ScanSource include the products businesses in Peru, Mexico, Columbia and Chile. Also, the agreement includes the selling of export operations carried out in Miami. Post the completion of the deal, more than 140 employees will become part of Intcomex.

The business to be divested will likely be presented as discontinued operations. Pre-tax charge (non-cash) related to the divestment is expected to be $28 million.

Subject to the fulfillment of closing conditions, ScanSource anticipates closing the divestment by September 2020.

It is worth noting here that the divestment of the above-mentioned businesses — a move that aligns with the company’s portfolio repositioning efforts — will allow it to focus on high growth opportunities.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $635 million, ScanSource currently carries a Zacks Rank #5 (Strong Sell).

In the past three months, the company’s shares have gained 16.5% compared with the industry’s growth of 29.3%.

Meanwhile, the Zacks Consensus Estimate for its earnings has been lowered by 3.7% to $2.08 for fiscal 2020 (ended June 2020; results pending) and decreased by 11.2% to $2.29 for fiscal 2021 (ending June 2021) in the past 60 days. On a year-over-year basis, estimates suggest a decline of 38.1% for fiscal 2020 and growth of 10.1% for fiscal 2021.

ScanSource, Inc. Price and Consensus

 

ScanSource, Inc. Price and Consensus

ScanSource, Inc. price-consensus-chart | ScanSource, Inc. Quote

Stock That Warrants a Look

Some better-ranked stocks in the Zacks Industrial Products sector are Tennant Company (TNC - Free Report) , Chart Industries, Inc. (GTLS - Free Report) and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While both Tennant and Chart Industries sport a Zacks Rank #1 (Strong Buy), SiteOne Landscape carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies improved for the current year. Further, earnings surprise for the last reported quarter was 380.00% for Tennant, 46.51% for Chart Industries and 34.56% for SiteOne Landscape.

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