Financial Contrast: ScanSource (NASDAQ:SCSC) versus Fabrinet (NYSE:FN)

Fabrinet (NYSE:FN) and ScanSource (NASDAQ:SCSC) are both technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, earnings, valuation, profitability and analyst recommendations.

Earnings and Valuation

This table compares Fabrinet and ScanSource”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fabrinet	$4.64 billion	3.58	$473.03 million	$13.05	35.58
ScanSource	$3.23 billion	0.39	$78.87 million	$3.66	16.87

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Fabrinet	10.19%	21.23%	13.96%
ScanSource	2.44%	10.10%	5.11%

Risk & Volatility

Fabrinet has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500. Comparatively, ScanSource has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500.

Insider & Institutional Ownership

97.4% of Fabrinet shares are held by institutional investors. Comparatively, 97.9% of ScanSource shares are held by institutional investors. 0.2% of Fabrinet shares are held by insiders. Comparatively, 3.2% of ScanSource shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Fabrinet and ScanSource, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fabrinet	0	4	6	0	2.60
ScanSource	0	3	0	1	2.50

Fabrinet currently has a consensus target price of $649.50, indicating a potential upside of 39.88%. ScanSource has a consensus target price of $43.00, indicating a potential downside of 30.34%. Given Fabrinet’s stronger consensus rating and higher probable upside, equities analysts plainly believe Fabrinet is more favorable than ScanSource.

Summary

Fabrinet beats ScanSource on 11 of the 15 factors compared between the two stocks.

About Fabrinet

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of advanced optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, advanced packaging, integration, final assembly, and testing. Its products include switching products, including reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths, speeds, and over various distances. The company's products also comprise tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. In addition, it provides solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. Further, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates; and other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. The company was incorporated in 1999 and is based in Grand Cayman, the Cayman Islands.

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.