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Scansource (SCSC)
NASDAQ:SCSC
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ScanSource
(NASDAQ:SCSC)
Rating:67Neutral
Price Target:
$46.00
▲(12.99%Upside)
ScanSource (SCSC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$916.70M
Dividend YieldN/A
Average Volume (3M)206.29K
Price to Earnings (P/E)14.7
Beta (1Y)1.21
Revenue Growth-14.07%
EPS Growth-9.65%
CountryUS
Employees2,300
SectorTechnology
Sector Strength82
IndustryTechnology Distributors
Share Statistics
EPS (TTM)0.86
Shares Outstanding22,595,608
10 Day Avg. Volume169,261
30 Day Avg. Volume206,291
Financial Highlights & Ratios
PEG Ratio14.40
Price to Book (P/B)0.82
Price to Sales (P/S)0.00
P/FCF Ratio-16.25
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue0.08
Enterprise Value/Gross Profit2.64
Enterprise Value/Ebitda2.06
Forecast
1Y Price Target
$47.67Price Target Upside17.10% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
ScanSource Business Overview & Revenue Model
Company DescriptionScanSource, Inc. (SCSC) is a global provider of technology products and solutions, specializing in the distribution of specialty technology products and solutions for businesses. The company operates primarily in the technology and communications sectors, offering a wide range of products such as point-of-sale systems, barcode scanners, networking equipment, and communications solutions. ScanSource serves various markets, including retail, healthcare, education, and government sectors, by providing innovative hardware and software solutions that enhance operational efficiencies.
How the Company Makes MoneyScanSource generates revenue by acting as a distributor of technology products and solutions. The company makes money through the sale of hardware and software products to value-added resellers (VARs), system integrators, and service providers. Key revenue streams include the sale of point-of-sale systems, barcode and data capture solutions, networking equipment, and unified communications solutions. Additionally, ScanSource provides services such as technical support, training, and financing options to its partners, enhancing its value proposition. Significant partnerships with leading technology manufacturers and a vast distribution network are pivotal to ScanSource's earnings, enabling the company to offer a comprehensive range of products and solutions to its customers.
ScanSource Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q3-2025)
| % Change Since: 12.71%|
Next Earnings Date:Aug 26, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. Despite challenges in sales decline, particularly in Brazil and a quarter-over-quarter decline, the company showed strong profitability, increased recurring revenue, successful acquisitions, and robust free cash flow generation. The announcement of a new share repurchase authorization is also positive.Q3-2025 Updates
Positive Updates
Increased Profitability and EBITDA Margins
Gross profit and adjusted EBITDA both increased 6% year over year. Adjusted EBITDA margin rose to 4.97%.
Growth in Recurring Revenue
Recurring revenue represents 36% of consolidated gross profits, contributing to a higher gross profit margin of 14.2%.
Successful Acquisitions
Acquisitions of Advantix and ResourceTip were accretive to EPS and ROIC, contributing positively to the company's financial metrics.
Introduction of New Business Development Initiatives
Launch of new business development team in the Integrated Solutions Group to propel emerging companies into scalable go-to-market success.
Strong Cash Flow Generation
Generated $65 million in free cash flow for Q3, bringing the year-to-date total to $99 million.
New Share Repurchase Authorization
Announced a new share repurchase authorization of $200 million, in addition to $42 million of current authorization.
Negative Updates
Decline in Net Sales
Net sales declined 6% year over year, primarily due to lower sales in Brazil and FX headwinds.
Challenges in Brazil
Sales in Brazil were affected by macroeconomic issues, FX headwinds, and more netted down revenue.
Quarter-over-Quarter Sales Decline
Sales declined 6% quarter over quarter, though this was better than the seasonal trend.
Company Guidance
In the recent earnings call, ScanSource, Inc. provided guidance for fiscal year 2025, highlighting several key metrics and strategic initiatives. The company expects net sales to reach approximately $3 billion, with adjusted EBITDA projected between $140 million and $145 million. Despite a 6% year-over-year decline in net sales for Q3, gross profit and adjusted EBITDA both increased by 6%, reflecting a higher mix of recurring revenue, which constituted 36% of the consolidated gross profits. The gross profit margin improved to 14.2%, and the adjusted EBITDA margin increased to 4.97%. Non-GAAP net income rose by 16%, with non-GAAP diluted EPS up 25%. The company also generated $65 million in free cash flow for the quarter, bringing the year-to-date total to $99 million, and ended Q3 with $146 million in cash and a net debt leverage ratio of approximately zero. With an adjusted ROIC of 13.6%, ScanSource has set a new share repurchase authorization of $200 million, in addition to the $42 million remaining from prior authorizations, while maintaining a target net debt leverage of one to two times adjusted EBITDA.ScanSource Financial Statement Overview
Summary
ScanSource shows a stable financial position with strong balance sheet and healthy cash flow generation. The balance sheet reflects a low debt-to-equity ratio, indicating conservative leverage. However, revenue growth has slowed, and profitability margins are modest, suggesting a need for improvement to enhance financial performance.Income Statement
ScanSource's income statement shows mixed results. The gross profit margin for the TTM is approximately 13.3%, slightly lower than previous years, indicating stable but not improving profitability. The net profit margin is about 2.3% for the TTM, which is modest. Revenue has decreased from previous periods, showing a negative growth trend. EBIT and EBITDA margins are 2.7% and 4.3% respectively, indicating stable operational efficiency but with room for improvement.65
Positive
Balance Sheet
The balance sheet reflects strong equity with an equity ratio of approximately 52.3% in the TTM. The debt-to-equity ratio is very low at around 0.15, indicating conservative leverage. ROE is lower at 7.5% for the TTM, signaling moderate profitability relative to equity but stable financial health overall.72
Positive
Cash Flow
Cash flow analysis shows robust free cash flow generation with positive growth in the TTM. The operating cash flow to net income ratio is strong, indicating healthy cash generation relative to reported earnings. The free cash flow to net income ratio is very favorable, suggesting effective cash management and potential for future investments or debt reduction.78
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.97B | 3.26B | 3.79B | 3.53B | 3.15B | 3.05B | Gross Profit |
| 394.35M | 399.05M | 449.24M | 426.52M | 350.72M | 355.57M | EBIT |
| 80.72M | 94.68M | 135.89M | 122.17M | 61.48M | 67.86M | EBITDA |
| 127.47M | 140.91M | 170.29M | 155.06M | 97.98M | -24.22M | Net Income Common Stockholders |
| 67.55M | 77.06M | 89.81M | 88.80M | 45.39M | -79.23M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 146.29M | 185.46M | 36.18M | 37.99M | 62.72M | 29.48M | Total Assets |
| 1.73B | 1.78B | 2.07B | 1.94B | 1.67B | 1.69B | Total Debt |
| 138.02M | 153.96M | 334.26M | 271.17M | 143.17M | 218.73M | Net Debt |
| -8.26M | -31.50M | 298.08M | 233.18M | 80.46M | 189.24M | Total Liabilities |
| 823.46M | 854.78M | 1.16B | 1.13B | 940.49M | 1.01B | Stockholders Equity |
| 901.75M | 924.25M | 905.30M | 806.53M | 731.19M | 678.25M |
| Cash Flow | Free Cash Flow | ||||
| 152.40M | 363.09M | -45.75M | -131.20M | 138.58M | 219.88M | Operating Cash Flow |
| 159.44M | 371.65M | -35.77M | -124.35M | 140.94M | 226.27M | Investing Cash Flow |
| -61.52M | 9.04M | -8.26M | -3.72M | 31.93M | -55.38M | Financing Cash Flow |
| -107.25M | -227.77M | 39.53M | 108.11M | -148.32M | -156.61M |
ScanSource Technical Analysis
Neutral
40.71
Price Trends
37.27
Positive
37.32
Positive
42.97
Negative
Market Momentum
0.80
Positive
55.33
Neutral
24.30
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCSC, the sentiment is Neutral. The current price of 40.71 is below the 20-day moving average (MA) of 40.82, above the 50-day MA of 37.27, and below the 200-day MA of 42.97, indicating a neutral trend. The MACD of 0.80 indicates Positive momentum. The RSI at 55.33 is Neutral, neither overbought nor oversold. The STOCH value of 24.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SCSC.
ScanSource Risk Analysis
ScanSource disclosed 24 risk factors in its most recent earnings report. ScanSource reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ScanSource Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.62B | 19.33 | 10.11% | 0.94% | 4.21% | 6.38% | |
73 Outperform | $4.29B | 14.34 | 6.42% | 2.58% | -10.52% | -42.40% | |
71 Outperform | $6.44B | 17.00 | 6.68% | ― | -11.13% | -43.00% | |
70 Outperform | $10.56B | 15.72 | 8.40% | 1.41% | 4.62% | 16.28% | |
70 Outperform | $4.28B | 26.85 | 11.37% | ― | -8.73% | -35.37% | |
67 Neutral | $916.70M | 14.68 | 7.32% | ― | -14.07% | -9.65% | |
62 Neutral | $11.95B | 9.93 | -7.21% | 4.85% | 7.32% | -8.25% |
* Technology Sector Average
Performance Comparison
SCSC
ScanSource
40.71
-4.18
-9.31%
ARW
Arrow Electronics
123.49
-3.28
-2.59%
AVT
Avnet
50.95
-0.11
-0.22%
NSIT
Insight Enterprises
134.19
-67.58
-33.49%
CNXN
PC Connection
64.50
0.12
0.19%
SNX
TD SYNNEX Corporation
124.64
-3.48
-2.72%
ScanSource Corporate Events
Executive/Board ChangesShareholder Meetings
ScanSource Shareholders Approve 2024 Incentive Plan and Directors
Neutral
Dec 10, 2024
At its annual meeting, ScanSource, Inc. received shareholder approval for its 2024 Omnibus Incentive Compensation Plan, which replaces the 2021 Plan and includes various stock-based awards for employees, officers, and directors. The approval signifies continuity in the company’s incentive structure and reflects shareholder support for the proposed compensation plans and the election of directors, as well as the ratification of Grant Thornton LLP as independent auditors for fiscal 2025.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.