Contrasting ScanSource (NASDAQ:SCSC) and W.W. Grainger (NYSE:GWW)

ScanSource (NASDAQ:SCSC) and W.W. Grainger (NYSE:GWW) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for ScanSource and W.W. Grainger, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ScanSource	0	0	1	0	3.00
W.W. Grainger	2	7	2	1	2.17

ScanSource currently has a consensus target price of $42.00, suggesting a potential downside of 5.26%. W.W. Grainger has a consensus target price of $1,080.3750, suggesting a potential upside of 6.64%. Given W.W. Grainger’s higher probable upside, analysts clearly believe W.W. Grainger is more favorable than ScanSource.

Risk & Volatility

ScanSource has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500. Comparatively, W.W. Grainger has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Profitability

This table compares ScanSource and W.W. Grainger’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ScanSource	2.35%	9.38%	4.87%
W.W. Grainger	10.99%	49.63%	21.63%

Insider and Institutional Ownership

97.9% of ScanSource shares are held by institutional investors. Comparatively, 80.7% of W.W. Grainger shares are held by institutional investors. 4.2% of ScanSource shares are held by company insiders. Comparatively, 6.1% of W.W. Grainger shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares ScanSource and W.W. Grainger”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ScanSource	$3.04 billion	0.32	$71.55 million	$3.01	14.73
W.W. Grainger	$17.17 billion	2.82	$1.91 billion	$39.41	25.71

W.W. Grainger has higher revenue and earnings than ScanSource. ScanSource is trading at a lower price-to-earnings ratio than W.W. Grainger, indicating that it is currently the more affordable of the two stocks.

Summary

W.W. Grainger beats ScanSource on 12 of the 15 factors compared between the two stocks.

About ScanSource

ScanSource, Inc. engages in the distribution of technology products and solutions in the United States, Canada, and Brazil. It operates through two segments, Specialty Technology Solutions and Modern Communications & Cloud. The Specialty Technology Solutions segment provides a portfolio of solutions primarily for enterprise mobile computing, data capture, barcode printing, point of sale (POS), payments, networking, electronic physical security, cyber security, and other technologies. This segment offers data capture and POS solutions to automate the collection, processing, and communication of information for commercial and industrial applications, including retail sales, distribution, shipping, inventory control, materials handling, warehouse management, and health care applications. It also provides electronic physical security products, such as identification, access control, video surveillance, and intrusion-related devices; networking products comprising wireless and networking infrastructure products; other software-as-a-service (SaaS) products; and engages in hardware rental activities. The Modern Communications & Cloud segment offers a portfolio of solutions primarily for communications technologies and services comprising voice, video conferencing, wireless, data networking, cybersecurity, cable, unified communications and collaboration, cloud, and technology services, as well as IP networks and other solutions for various vertical markets, such as education, healthcare, and government. The company serves manufacturing, warehouse and distribution, retail and e-commerce, hospitality, transportation and logistics, government, education and healthcare, and other industries. ScanSource, Inc. was incorporated in 1992 and is headquartered in Greenville, South Carolina.

About W.W. Grainger

W.W. Grainger, Inc., together with its subsidiaries, distributes maintenance, repair, and operating products and services primarily in North America, Japan, the United Kingdom, and internationally. The company operates through two segments, High-Touch Solutions N.A. and Endless Assortment. The company provides safety, security, material handling and storage equipment, pumps and plumbing equipment, cleaning and maintenance, and metalworking and hand tools. It also offers technical support and inventory management services. The company serves smaller businesses to large corporations, government entities, and other institutions, as well as commercial, healthcare, and manufacturing industries through sales and service representatives, and electronic and ecommerce channels. W.W. Grainger, Inc. was founded in 1927 and is headquartered in Lake Forest, Illinois.