ScanSource (NASDAQ:SCSC) Shares Gap Down After Earnings Miss

Key Points

• ScanSource shares fell sharply after the earnings release, opening at $49.98 versus the prior close of $56.98.
• Quarterly EPS was $0.86, missing the $1.12 consensus estimate, while revenue of $962.3 million beat expectations of $860.4 million and rose 30.1% year over year.
• Analysts’ consensus rating was Hold, with a $51 price target; company insiders sold 95,632 shares worth about $5.5 million over the past three months.

ScanSource, Inc. (NASDAQ:SCSC - Get Free Report)'s share price gapped down before the market opened on Thursday following a weaker than expected earnings announcement. The stock had previously closed at $56.98, but opened at $49.98. ScanSource shares last traded at $50.2760, with a volume of 35,705 shares trading hands.

The industrial products company reported $0.86 earnings per share for the quarter, missing analysts' consensus estimates of $1.12 by ($0.26). The business had revenue of $962.29 million for the quarter, compared to analyst estimates of $860.35 million. ScanSource had a return on equity of 10.10% and a net margin of 2.44%. The business's revenue was up 30.1% on a year-over-year basis. During the same quarter in the previous year, the business posted $1.06 earnings per share.

Analyst Upgrades and Downgrades

A number of brokerages recently commented on SCSC. Northcoast Research lowered ScanSource from a "buy" rating to a "neutral" rating in a research report on Monday, August 17th. Barclays upped their price objective on shares of ScanSource from $43.00 to $51.00 and gave the stock an "equal weight" rating in a report on Monday, October 12th. Wall Street Zen raised shares of ScanSource from a "buy" rating to a "strong-buy" rating in a research report on Sunday, October 25th. Weiss Ratings raised shares of ScanSource from a "hold (c+)" rating to a "buy (b-)" rating in a research report on Thursday, October 8th. Finally, Zacks Research downgraded ScanSource from a "strong-buy" rating to a "hold" rating in a research note on Tuesday, October 20th. One equities research analyst has rated the stock with a Buy rating and three have issued a Hold rating to the company's stock. Based on data from MarketBeat.com, ScanSource presently has a consensus rating of "Hold" and a consensus target price of $51.00.

Insider Buying and Selling

In other news, Director Charles Mathis sold 3,000 shares of the business's stock in a transaction on Friday, September 11th. The shares were sold at an average price of $58.00, for a total transaction of $174,000.00. Following the completion of the transaction, the director directly owned 25,027 shares in the company, valued at $1,451,566. The trade was a 10.70% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, CEO Michael L. Baur sold 57,359 shares of the firm's stock in a transaction dated Friday, September 11th. The shares were sold at an average price of $58.04, for a total value of $3,329,116.36. Following the completion of the sale, the chief executive officer directly owned 200,698 shares in the company, valued at approximately $11,648,511.92. The trade was a 22.23% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders sold 95,632 shares of company stock valued at $5,484,582 over the last three months. Insiders own 3.18% of the company's stock.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. BlackRock Inc. purchased a new position in shares of ScanSource in the second quarter worth $200,140,000. Pzena Investment Management LLC purchased a new position in ScanSource during the 2nd quarter valued at about $57,807,000. Bank of New York Mellon Corp purchased a new stake in shares of ScanSource in the second quarter worth $7,036,000. Empowered Funds LLC purchased a new stake in ScanSource during the 2nd quarter valued at $5,517,000. Finally, Meeder Asset Management Inc. bought a new stake in shares of ScanSource in the second quarter worth approximately $4,859,000. 97.91% of the stock is currently owned by hedge funds and other institutional investors.

ScanSource Stock Down 11.3%

The company has a debt-to-equity ratio of 0.11, a quick ratio of 1.15 and a current ratio of 1.76. The company's 50-day moving average price is $58.73 and its 200 day moving average price is $48.07. The stock has a market cap of $1.03 billion, a PE ratio of 13.78, a price-to-earnings-growth ratio of 0.77 and a beta of 1.28.

ScanSource Company Profile

ScanSource, Inc NASDAQ: SCSC is a technology distributor that connects manufacturers of business technology products with value-added resellers, systems integrators and other channel partners. The company provides products, services and expertise intended to help partners design, deploy and support technology solutions for business customers.

ScanSource's offerings include point-of-sale and payment technology, barcode scanners, mobile computing devices, networking equipment, cybersecurity products, communications systems and cloud-based services.

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