Dj Chmn Baur Registers 100000 Of Scansource Inc >Scsc

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is ScanSource (SCSC). SCSC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 15.06. This compares to its industry's average Forward P/E of 29.39. Over the past 52 weeks, SCSC's Forward P/E has been as high as 15.46 and as low as 6.92, with a median of 12.53.

We also note that SCSC holds a PEG ratio of 1.51. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SCSC's industry currently sports an average PEG of 1.53. Over the last 12 months, SCSC's PEG has been as high as 1.55 and as low as 0.69, with a median of 1.25.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SCSC has a P/S ratio of 0.37. This compares to its industry's average P/S of 0.98.

Value investors will likely look at more than just these metrics, but the above data helps show that ScanSource is likely undervalued currently. And when considering the strength of its earnings outlook, SCSC sticks out at as one of the market's strongest value stocks.

Zacks Investment Research

Momentum investing is essentially an exception to the idea of "buying low and selling high." Investors following this style of investing are usually not interested in betting on cheap stocks and waiting long for them to recover. Instead, they believe that "buying high and selling higher" is the way to make far more money in lesser time.

Everyone likes betting on fast-moving trending stocks, but it isn't easy to determine the right entry point. These stocks often lose momentum when their future growth potential fails to justify their swelled-up valuation. In that phase, investors find themselves invested in shares that have limited to no upside or even a downside. So, betting on a stock just by looking at the traditional momentum parameters could be risky at times.

A safer approach could be investing in bargain stocks with recent price momentum. While the Zacks Momentum Style Score (part of the Zacks Style Scores system) helps identify great momentum stocks by paying close attention to trends in a stock's price or earnings, our 'Fast-Paced Momentum at a Bargain' screen comes handy in spotting fast-moving stocks that are still attractively priced.

There are several stocks that currently pass through the screen and ScanSource (SCSC) is one of them. Here are the key reasons why this stock is a great candidate.

A dash of recent price momentum reflects growing interest of investors in a stock. With a four-week price change of 7.2%, the stock of this technology products distributor is certainly well-positioned in this regard.

While any stock can see a spike in price for a short period, it takes a real momentum player to deliver positive returns for a longer time frame. SCSC meets this criterion too, as the stock gained 5.8% over the past 12 weeks.

Moreover, the momentum for SCSC is fast paced, as the stock currently has a beta of 1.42. This indicates that the stock moves 42% higher than the market in either direction.

Given this price performance, it is no surprise that SCSC has a Momentum Score of B, which indicates that this is the right time to enter the stock to take advantage of the momentum with the highest probability of success.

In addition to a favorable Momentum Score, an upward trend in earnings estimate revisions has helped SCSC earn a Zacks Rank #1 (Strong Buy). Our research shows that the momentum-effect is quite strong among Zacks Rank #1 and #2 stocks. That's because as covering analysts raise their earnings estimates for a stock, more and more investors take an interest in it, helping its price race to keep up. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here

Most importantly, despite possessing fast-paced momentum features, SCSC is trading at a reasonable valuation. In terms of Price-to-Sales ratio, which is considered as one of the best valuation metrics, the stock looks quite cheap now. SCSC is currently trading at 0.39 times its sales. In other words, investors need to pay only 39 cents for each dollar of sales.

So, SCSC appears to have plenty of room to run, and that too at a fast pace.

In addition to SCSC, there are several other stocks that currently pass through our 'Fast-Paced Momentum at a Bargain' screen. You may consider investing in them and start looking for the newest stocks that fit these criteria.

This is not the only screen that could help you find your next winning stock pick. Based on your personal investing style, you may choose from over 45 Zacks Premium Screens that are strategically created to beat the market.

However, keep in mind that the key to a successful stock-picking strategy is to ensure that it produced profitable results in the past. You could easily do that with the help of the Zacks Research Wizard. In addition to allowing you to backtest the effectiveness of your strategy, the program comes loaded with some of our most successful stock-picking strategies.

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Zacks Investment Research

Investors with an interest in Industrial Services stocks have likely encountered both ScanSource (SCSC) and W.W. Grainger (GWW). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, ScanSource has a Zacks Rank of #2 (Buy), while W.W. Grainger has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SCSC likely has seen a stronger improvement to its earnings outlook than GWW has recently. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SCSC currently has a forward P/E ratio of 16.05, while GWW has a forward P/E of 30.90. We also note that SCSC has a PEG ratio of 1.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GWW currently has a PEG ratio of 3.32.

Another notable valuation metric for SCSC is its P/B ratio of 1.35. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, GWW has a P/B of 15.19.

These are just a few of the metrics contributing to SCSC's Value grade of A and GWW's Value grade of C.

SCSC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SCSC is likely the superior value option right now.

Zacks Investment Research

ScanSource (SCSC) came out with quarterly earnings of $0.84 per share, beating the Zacks Consensus Estimate of $0.77 per share. This compares to earnings of $0.74 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 9.09%. A quarter ago, it was expected that this technology products distributor would post earnings of $0.95 per share when it actually produced earnings of $0.80, delivering a surprise of -15.79%.

Over the last four quarters, the company has surpassed consensus EPS estimates just once.

ScanSource, which belongs to the Zacks Industrial Services industry, posted revenues of $775.58 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.90%. This compares to year-ago revenues of $876.31 million. The company has not been able to beat consensus revenue estimates over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

ScanSource shares have added about 27.3% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for ScanSource?

While ScanSource has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for ScanSource: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.85 on $857 million in revenues for the coming quarter and $3.24 on $3.29 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Industrial Services is currently in the bottom 27% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Hillenbrand (HI), another stock in the same industry, has yet to report results for the quarter ended September 2024. The results are expected to be released on November 13.

This diversified industrial company specializing in business-to-business products is expected to post quarterly earnings of $0.93 per share in its upcoming report, which represents a year-over-year change of -17.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Hillenbrand's revenues are expected to be $796.8 million, up 4.5% from the year-ago quarter.

Zacks Investment Research