Back to top

Here's Why You Should Consider Buying ScanSource (SCSC) Now

Read MoreHide Full Article

We believe that ScanSource, Inc. (SCSC - Free Report) is a solid choice for investors, seeking exposure in the industrial services space. Solid product offerings, vast customer base and sound capital allocation policy are boons for the company.

The stock, with roughly $853 million market capitalization, has been upgraded to a Zacks Rank #1 (Strong Buy) today. Its investment appeal is further accentuated by a VGM Score of A.

Why the Upgrade?

We are providing a snapshot of how ScanSource fared in the second quarter of fiscal 2018 (ended Dec 31, 2017). Its earnings of 90 cents surpassed the Zacks Consensus Estimate by 9.76% while grew 20% compared with the year-ago quarter. Net sales were up 14% year over year on the back of healthy performance of the Worldwide Barcode, Networking and Security segment.

In the quarters ahead, we believe that innovative offerings to a wide customer base — especially in the barcode, physical security, payments, point-of-sale (POS), cloud and telecom services markets — will be advantageous for ScanSource. Its vendor count is more than 500 while the customer base is more than 35,000. Beside a solid product portfolio, healthy partnership with vendors, expansion opportunities in Solutions-as-a-Service and financial flexibility are other positive aspects of the company.

In the third quarter of fiscal 2018 (ended March 2018), ScanSource anticipates net sales to be $860-$920 million, up from $813.5 million generated in the year-ago quarter. Non-GAAP earnings are predicted to be 67-73 cents per share, above the year-ago tally of 65 cents.

Also, the company’s sound capital allocation policy raises its investment appeal. Key areas of focus are investments in growth opportunities through meaningful acquisitions and capital spending as well as rewarding the shareholders handsomely through share buybacks. Some of the company’s buyouts, including POS Portal in July 2017 and Intelisys in August 2016 are worth mentioning.

In the last 60 days, the company’s earnings estimates both for fiscal 2018 (ending June 2018) and fiscal 2019 (ending June 2019) were revised upward by one brokerage firm. The Zacks Consensus Estimate currently stands at $3.16 for fiscal 2018 and $3.58 for fiscal 2019, reflecting an increase of 2.3% and 5%, respectively, from their 60-day ago tallies.

The company has a positive Earnings ESP of 4.29% for fiscal 2019. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

ScanSource, Inc. Price, Consensus and EPS Surprise

ScanSource, Inc. Price, Consensus and EPS Surprise | ScanSource, Inc. Quote

Other Stocks to Consider

Some other top-ranked stocks in the industry worth considering are Harsco Corporation (HSC - Free Report) , HD Supply Holdings, Inc. (HDS - Free Report) and DMC Global Inc. (BOOM - Free Report) . While both Harsco and HD Supply sport a Zacks Rank #1, DMC Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last 60 days, bottom-line estimates for these three stocks improved for the current year. Also, Harsco has delivered an average positive earnings surprise of 134.44% in the last four quarters while HD Supply has pulled off 3.74% and DMC Global has delivered 22.95%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

More from Zacks Analyst Blog

You May Like

Published in