Softcat (SCT) AI Stock Analysis

• Market Cap: £3.48B
• Dividend Yield: 1.54%
• Average Volume (3M): 257.69K
• Price to Earnings (P/E): 27.8
• Beta (1Y): 0.75
• Revenue Growth: 10.75%
• EPS Growth: 10.61%
• Country: UK
• Employees: 2,509
• Sector: Technology
• Sector Strength: 78
• Industry: Information Technology Services
• EPS (TTM): 0.63
• Shares Outstanding: 199,928,450
• 10 Day Avg. Volume: 299,992
• 30 Day Avg. Volume: 257,692
• PEG Ratio: 5.73
• Price to Book (P/B): 12.79
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 27.92
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £1,680.71
• Price Target Upside: -3.79% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 72 Outperform
• Price Target: 2,025.00p ▲( 15.91% Upside)

Softcat's overall stock score reflects its strong financial performance, strategic corporate actions, and stable technical position. While its valuation indicates high growth expectations are already priced in, the company's low leverage and effective cost management bolster its market position. The current technical indicators suggest stability but caution is warranted due to potential overbought conditions.

Positive Factors

Earnings

Softcat reported a 'beat-across-the-board' set of 1H25 results, with revenues driven by strong hardware momentum and significant growth in software and services.

Financial Performance

H1 EPS was 6% above expectations, reflecting a stronger performance than anticipated.

Guidance

FY25 guidance has been upgraded, indicating confidence in continued growth and profitability.

Negative Factors

Analyst Recommendation

Analyst's recommendation stays at Underperform.

Market Expectations

Softcat remains a well run company, but one where investors need to recalibrate expectations from expecting upside to acknowledging that forecasts are appropriate and potentially a stretch.

Valuation

Softcat is trading at a higher valuation compared to both its peer group and the broader European IT Services sector, suggesting a premium perception in the market.

Softcat Business Overview & Revenue Model

Company Description

Softcat plc primarily acts as a value-added IT reseller and IT infrastructure solutions provider in the United Kingdom. The company advices, procures, designs, implements, and manages technology, such as software licensing, workplace technology, networking, security, and cloud and datacenter for businesses and public sector organizations. It also offers asset management, collaboration, connectivity, and device services. In addition, the company provides supply chain operations and virtual desktop and applications. Further, it offers lifecycle, modern management, and financial solutions. The company was incorporated in 1987 and is headquartered in Marlow, the United Kingdom.

How the Company Makes Money

Softcat makes money by selling IT infrastructure products and services to its customers. Its revenue model comprises several key streams: sales of software licenses from major vendors like Microsoft, Adobe, and VMware; hardware sales including computers, servers, and networking equipment; and professional services such as consulting, managed services, and technology implementation. The company also generates income from cloud services, providing customers with access to cloud-based solutions and platforms. Partnerships with leading technology vendors play a critical role in Softcat's earnings, allowing it to offer competitive pricing and access to the latest technology innovations. Additionally, Softcat benefits from its strong customer relationships and a reputation for excellent customer service, which contribute to repeat business and long-term contracts.

Softcat Financial Statement Overview

Summary

Softcat exhibits strong financial health with robust profitability, low leverage, and solid cash flow generation. The company has managed its costs effectively, resulting in high EBIT and EBITDA margins. Despite some fluctuations in revenue growth, the overall financial performance remains strong.

Income Statement

Softcat demonstrates strong profitability with a consistent increase in gross profit margin from 21.3% to 43.2% over the years, reflecting effective cost management. The net profit margin has also shown stability, averaging around 10-12%. Despite a slight decline in revenue growth recently, the overall trajectory has been positive with revenues recovering from a dip in 2021. EBIT and EBITDA margins are robust, indicating healthy operational efficiency.

Balance Sheet

The company's balance sheet is strong, with a low debt-to-equity ratio, consistently below 0.05, signifying low leverage and financial risk. Return on equity has improved significantly, showing effective utilization of shareholders' funds. The equity ratio has remained stable at around 38-40%, indicating a healthy proportion of equity financing.

Cash Flow

Softcat's cash flow performance is solid, with a notable increase in free cash flow over the years, indicating improved cash generation capability. The operating cash flow to net income ratio is generally above 1, showing strong cash conversion. However, fluctuations in investing and financing cash flows suggest a need for careful management in capital allocation.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
1.04B	962.63M	985.30M	1.08B	784.05M	1.08B
	Gross Profit
440.60M	417.75M	372.31M	326.65M	276.06M	235.47M
	EBIT
161.00M	154.06M	139.85M	139.08M	119.35M	95.32M
	EBITDA
169.95M	166.47M	145.96M	143.61M	124.24M	98.90M
	Net Income Common Stockholders
125.38M	119.04M	112.03M	110.41M	96.19M	75.66M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
141.04M	158.45M	122.62M	97.32M	101.72M	80.14M
	Total Assets
831.88M	780.75M	647.72M	672.06M	497.36M	430.95M
	Total Debt
28.34M	10.36M	9.76M	6.67M	8.30M	9.84M
	Net Debt
-112.71M	-148.10M	-112.86M	-90.65M	-93.42M	-70.30M
	Total Liabilities
550.97M	482.71M	396.28M	460.96M	318.21M	290.20M
	Stockholders Equity
280.91M	298.04M	251.44M	211.10M	179.14M	140.75M
Cash Flow		Free Cash Flow
128.54M	120.27M	102.79M	78.89M	85.01M	55.67M
	Operating Cash Flow
133.97M	115.61M	106.04M	84.11M	91.48M	64.63M
	Investing Cash Flow
-8.55M	-1.35M	-3.25M	-5.22M	-6.46M	-8.96M
	Financing Cash Flow
-96.85M	-78.42M	-77.28M	-86.86M	-63.43M	-54.80M

Softcat Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1747.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SCT, the sentiment is Positive. The current price of 1747 is below the 20-day moving average (MA) of 1751.50, above the 50-day MA of 1645.97, and above the 200-day MA of 1567.66, indicating a neutral trend. The MACD of 45.21 indicates Positive momentum. The RSI at 54.19 is Neutral, neither overbought nor oversold. The STOCH value of 20.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:SCT.

Softcat Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCC	79 Outperform	£2.63B	16.23	19.50%	2.82%	0.61%	-9.17%
FDM	73 Outperform	£243.79M	11.87	28.48%	13.00%	-22.84%	-49.60%
SCT	72 Outperform	£3.48B	27.78	47.63%	1.54%	10.75%	10.61%
Sector *	61 Neutral	$11.28B	10.16	-6.88%	2.97%	7.41%	-8.93%
RCN	57 Neutral	£202.51M	326.28	1.06%	2.83%	3.57%	―
FDP	56 Neutral	£543.46M	―	-11.89%	―	-22.83%	-350.82%
TRD	48 Neutral	£47.91M	60.04	20.93%	2.18%	26.44%	―

Softcat Corporate Events

Softcat Executives Acquire Shares to Strengthen Stakeholder Confidence

Softcat plc announced transactions involving its CEO, Graham Charlton, and CFO, Katy Mecklenburgh, who purchased partnership shares under the company’s Share Incentive Plan. These transactions, conducted on the London Stock Exchange, reflect a strategic move to align the interests of key executives with the company’s performance, potentially impacting stakeholder confidence and market perception.

Softcat Announces Total Voting Rights and Share Capital Details

Softcat plc has announced its total voting rights and share capital details as of April 30, 2025, in compliance with the Disclosure Guidance and Transparency Rules. The company has 199,928,451 ordinary shares with voting rights, which shareholders can use as a denominator for calculating their interest in the company.

Softcat Executives Invest in Company Shares, Signaling Confidence

Softcat plc announced transactions involving its CEO, Graham Charlton, and CFO, Katy Mecklenburgh, who purchased partnership shares under the company’s Share Incentive Plan. These transactions, conducted on the London Stock Exchange, reflect the executives’ commitment to the company’s growth and align their interests with shareholders, potentially impacting Softcat’s market perception positively.

Softcat Acquires Oakland Group to Boost Data and AI Capabilities

Softcat has acquired Oakland Group Services Ltd, a data and AI consultancy, to enhance its capabilities in data strategy, governance, architecture, engineering, analytics, and AI. This acquisition strengthens Softcat’s market position by expanding its service offerings to meet the growing demand for data expertise in both corporate and public sectors, and aligns with Softcat’s strategic focus on innovation and automation.

Softcat Announces Total Voting Rights for March 2025

Softcat plc announced its total voting rights as of March 31, 2025, revealing a share capital consisting of 199,924,707 ordinary shares with voting rights. This disclosure is in line with the FCA’s Disclosure Guidance and Transparency Rules, allowing shareholders to calculate their interests in the company accurately.

Softcat Reports Strong First Half 2025 Results, Upgrades Profit Guidance

Softcat plc reported strong financial performance for the first half of 2025, with double-digit growth in gross profit and gross invoiced income. The company upgraded its full-year operating profit guidance, reflecting successful strategic execution and a robust second-half pipeline. Despite challenging trading conditions, Softcat’s growth model and investment in AI and automation position it well for future expansion, with potential for acquisitions to further enhance its offerings.

Capital Group Reduces Stake in Softcat PLC

The Capital Group Companies, Inc. has reduced its voting rights in Softcat PLC from 5.4% to 4.97%, as reported on March 12, 2025. This change in holdings may impact the company’s shareholder dynamics, reflecting a shift in investment strategy by a major institutional investor, which could influence market perceptions and stakeholder interests.

Softcat Executives Invest in Company Shares, Signaling Confidence

Softcat plc announced transactions involving its CEO, Graham Charlton, and CFO, Katy Mecklenburgh, who both purchased partnership shares under the company’s Share Incentive Plan. These transactions, conducted on the London Stock Exchange, reflect the executives’ commitment to the company’s growth and align their interests with shareholders, potentially enhancing stakeholder confidence.

Softcat Announces Total Voting Rights Update

Softcat plc announced its total voting rights, revealing that as of 28 February 2025, the company has 199,916,436 ordinary shares in issue, each with voting rights. This disclosure is in accordance with the FCA’s Disclosure Guidance and Transparency Rules, providing shareholders with the necessary information to assess their interests in the company.

Softcat to Announce Half-Year Results and Host Investor Briefing

Softcat plc announced it will release its financial results for the six months ending 31 January 2025 on 19 March 2025, accompanied by a virtual briefing for investors and analysts. This announcement underscores Softcat’s commitment to transparency and engagement with stakeholders, potentially impacting its market positioning and investor relations.