ScanSource (NASDAQ:SCSC – Get Free Report) and Cemtrex (NASDAQ:CETX – Get Free Report) are both small-cap technology companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.
Risk and Volatility
ScanSource has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500. Comparatively, Cemtrex has a beta of 2.15, suggesting that its stock price is 115% more volatile than the S&P 500.
Profitability
This table compares ScanSource and Cemtrex’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ScanSource | 1.96% | 9.44% | 4.46% |
| Cemtrex | -38.59% | -129.15% | -45.98% |
Analyst Recommendations
This is a summary of current ratings and recommmendations for ScanSource and Cemtrex, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ScanSource | 0 | 4 | 0 | 0 | 2.00 |
| Cemtrex | 1 | 0 | 0 | 0 | 1.00 |
ScanSource presently has a consensus target price of $51.00, indicating a potential upside of 14.27%. Given ScanSource’s stronger consensus rating and higher probable upside, equities analysts clearly believe ScanSource is more favorable than Cemtrex.
Valuation and Earnings
This table compares ScanSource and Cemtrex”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| ScanSource | $3.45 billion | 0.26 | $78.87 million | $3.19 | 13.99 |
| Cemtrex | $76.49 million | 0.02 | -$28.11 million | ($81.19) | -0.01 |
ScanSource has higher revenue and earnings than Cemtrex. Cemtrex is trading at a lower price-to-earnings ratio than ScanSource, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
97.9% of ScanSource shares are held by institutional investors. Comparatively, 2.0% of Cemtrex shares are held by institutional investors. 3.2% of ScanSource shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Summary
ScanSource beats Cemtrex on 12 of the 13 factors compared between the two stocks.
About ScanSource
ScanSource, Inc. is a technology distributor that connects manufacturers with resellers and other channel partners. Its products and services support business communications, networking, physical security, and point-of-sale operations. The company distributes equipment such as barcode scanners, mobile computers, payment devices, networking hardware, and communications and security systems. Through its Intelisys business, ScanSource also supports channel partners offering connectivity, cloud, and related technology services.
About Cemtrex
Cemtrex, Inc. (NASDAQ: CETX) is a technology and industrial services company focused primarily on security solutions and plant services. Its security business operates through Vicon Industries, a provider of video surveillance products and related software. Vicon’s offerings include network cameras, video management systems, video analytics, access-control solutions and other security technologies designed for commercial, institutional, government and industrial customers. These products are used to monitor facilities, manage physical access and support security operations.
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