Critical Review: Ashtead Group (OTCMKTS:ASHTY) versus ScanSource (NASDAQ:SCSC)

Ashtead Group (OTCMKTS:ASHTY) and ScanSource (NASDAQ:SCSC) are both industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Profitability

This table compares Ashtead Group and ScanSource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ashtead Group	12.83%	20.18%	6.98%
ScanSource	2.44%	9.35%	4.87%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Ashtead Group and ScanSource, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ashtead Group	1	2	3	0	2.33
ScanSource	0	3	1	0	2.25

ScanSource has a consensus target price of $42.50, indicating a potential upside of 5.12%. Given ScanSource’s higher possible upside, analysts plainly believe ScanSource is more favorable than Ashtead Group.

Institutional & Insider Ownership

0.8% of Ashtead Group shares are owned by institutional investors. Comparatively, 97.9% of ScanSource shares are owned by institutional investors. 3.2% of ScanSource shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Ashtead Group and ScanSource”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ashtead Group	$10.79 billion	2.47	$1.51 billion	$13.22	19.26
ScanSource	$3.02 billion	0.29	$71.55 million	$3.26	12.40

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

Summary

Ashtead Group beats ScanSource on 10 of the 13 factors compared between the two stocks.

About Ashtead Group

Ashtead Group plc, together with its subsidiaries, engages in the construction, industrial, and general equipment rental business in the United States, the United Kingdom, and Canada. It provides pumps, power generation, heating, cooling, scaffolding, traffic management, temporary flooring, trench shoring, and lifting services. The company offers its products and services for facilities maintenance and municipalities, such as office complexes, apartment complexes, government, hospitals, data centers, parks and recreation departments, schools and universities, shopping centers, pavement/kerb repairs, and golf course maintenance; construction of airports, highways and bridges, office buildings, data centers, schools and universities, shopping centers, residential, remodeling, manufacturing plants, and green energy plants; emergency response for fire, hurricanes, flooding, tornadoes, winter, storms, residential and health emergencies, alternative care facilities, points of distribution, and mobile testing facilities; and entertainment and special events, including national events, concerts, sporting events, film and telvision production, theme parks, festivals farmers' markets, local 5k runs, and cycle races. It operates 1,094 stores in the United States, 119 stores in Canada, and 185 stores in the United Kingdom under the Sunbelt Rentals brand. The company was founded in 1947 and is headquartered in London, the United Kingdom.

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.