Critical Analysis: DMC Global (NASDAQ:BOOM) and ScanSource (NASDAQ:SCSC)

DMC Global (NASDAQ:BOOM) and ScanSource (NASDAQ:SCSC) are both small-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DMC Global	$642.85 million	0.25	-$94.45 million	($8.64)	-0.90
ScanSource	$3.04 billion	0.30	$71.55 million	$3.01	13.97

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

Insider & Institutional Ownership

77.6% of DMC Global shares are owned by institutional investors. Comparatively, 97.9% of ScanSource shares are owned by institutional investors. 2.8% of DMC Global shares are owned by insiders. Comparatively, 4.2% of ScanSource shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DMC Global	-17.54%	-1.27%	-0.48%
ScanSource	2.35%	9.38%	4.87%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DMC Global	1	2	0	0	1.67
ScanSource	0	2	1	1	2.75

DMC Global presently has a consensus target price of $8.50, indicating a potential upside of 8.97%. ScanSource has a consensus target price of $42.50, indicating a potential upside of 1.05%. Given DMC Global’s higher probable upside, analysts clearly believe DMC Global is more favorable than ScanSource.

Volatility & Risk

DMC Global has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, ScanSource has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

Summary

ScanSource beats DMC Global on 13 of the 15 factors compared between the two stocks.

About DMC Global

DMC Global Inc. provides a suite of engineered products and various solutions for the construction, energy, industrial processing, and transportation markets worldwide. The company operates through three segments: Arcadia, DynaEnergetics, and NobelClad. The Arcadia segment manufactures, assembles, and sells architectural building products, including exterior and interior framing systems, curtain walls, windows, doors, and interior partitions; architectural components, architectural framing systems, entrance systems, and sun control products; sliding and glazing systems; and thermally broken steel, aluminum windows and doors, and wood doors and windows. It sells its products through a national in-house sales force for buildings, such as office towers, airports, hotels, education and athletic facilities, health care locations, government buildings, retail centers, mixed use, and multi-family residential buildings. The DynaEnergetics segment designs, manufactures, markets, and sells perforating systems, including initiation systems, shaped charges, detonating cords, gun hardware, and control panels; and perforating systems and associated hardware for the oil and gas industry. It sells its products through direct selling, distributors, and independent sales representatives. The NobelClad segment produces and sells explosion-welded clad metal plates for use in the construction of heavy, corrosion resistant pressure vessels, and heat exchangers for oil and gas, chemical and petrochemical, alternative energy, hydrometallurgy, aluminum production, shipbuilding, rail car manufacturing, power generation, and industrial refrigeration industries. It sells its products through direct sales personnel, program managers, and independent sales representatives. The company was formerly known as Dynamic Materials Corporation and changed its name to DMC Global Inc. in November 2016. DMC Global Inc. was founded in 1965 and is headquartered in Broomfield, Colorado.

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.