One-glance verdict
Undervalued
$121.51 our estimate vs market $57.71
Wall Street consensus: $64.50 (-46.9% lower than our fair-value estimate)
53% below our estimate, below the bear case
Fundamentals snapshot
ScanSource, Inc.
SCSC · NMS · Technology · Electronics & Computer Distribution
Current price
$57.71
52-week range
$33.76 - $66.78
Market cap
$1.18B
Balance sheet
Healthy
15.39x Strong cushion
Net debt $22.52M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 6.1% last year.
- Reward Returns 8.7% on equity, ahead of 16% of its peers.
- Risk Stock trades 24.2% above its 5-year average P/E.
- Risk Operating margin compressed from 3.6% to 3.5% over 3 years.
What this company does
ScanSource, Inc.
ScanSource is a company that acts as a middleman, distributing technology products and services like barcode scanners, security cameras, and cloud services to other businesses that then sell them to end customers. Their main money comes from selling these tech gadgets and solutions, and this matters because they help businesses get the technology they need to operate smoothly and efficiently.
How the company got here
ScanSource was founded in 1992 with a focus on distributing barcode scanning and point-of-sale (POS) equipment to businesses looking to automate their operations. The company went public in 1994, allowing it to expand its reach and offerings. Over the years, ScanSource grew through strategic acquisitions, notably adding capabilities in telecommunications and cloud services, which broadened its market presence. This evolution has positioned ScanSource as a key player in the technology distribution landscape, adapting to the increasing complexity and convergence of IT, connectivity, and cloud computing.
What it actually does
ScanSource acts as a crucial link between technology manufacturers and the businesses that need those technologies. Instead of selling directly to end-users, ScanSource sells to channel partners, such as resellers and managed service providers, who then create and deliver solutions to their own customers. This means ScanSource provides the hardware, software, and services that enable other businesses to operate more efficiently, manage inventory, process payments, and communicate effectively.
Specialty Technology Solutions
This segment is ScanSource's core distribution business, offering a wide array of specialized technology products. These include devices for automatic identification and data capture (like barcode scanners and printers), point-of-sale systems used in retail and hospitality, payment terminals for processing transactions, and physical security equipment such as surveillance cameras and access control systems. It also covers networking products and communication solutions like voice and video systems. This part of the business is largely driven by the sale of physical products, though it also includes opportunities for recurring revenue through hardware rentals and software-as-a-service (SaaS) offerings.
Intelisys & Advisory
This segment focuses on providing connectivity, cloud, unified communications, and contact center services, often on a recurring revenue basis. ScanSource works with technology advisors and partners to offer solutions like cloud computing, software-defined networking, and managed AI services. This business model is driven by commissions and advisory fees, making it a significant contributor to the company's higher-margin, recurring revenue streams. It's strategically important because it diversifies ScanSource's income beyond purely transactional product sales.
What management is betting on now
ScanSource's current strategy emphasizes improving the quality of its growth by focusing on higher-margin, recurring revenue streams, particularly through its Intelisys & Advisory segment. Management is prioritizing the expansion of cloud, connectivity, and managed services to create more predictable income and reduce reliance on product sales alone. They are also working to drive profitable growth within their specialty distribution categories by focusing on areas where they have strong vendor relationships and channel relevance. A key initiative is to better leverage their hybrid model by encouraging cross-selling between hardware and services channels, aiming for a healthier mix of gross profit across the business.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$42.45M
FY2025 Q2
$-8.16M
FY2025 Q3
$64.64M
FY2025 Q4
$5.13M
FY2026 Q1
$20.82M
FY2026 Q2
$28.87M
FY2026 Q3
$68.95M
FY2026 Q4
$-4.79M
Revenue
$953.11M
Net income
$25.62M
Diluted EPS
1.22
Operating cash flow
$-2.27M
Free cash flow
$-4.79M
Fetching…
Sources
Revenue
$766.79M
Net income
$16.89M
Diluted EPS
0.78
Operating cash flow
$71.35M
Free cash flow
$68.95M
Fetching…
Sources
Revenue
$766.51M
Net income
$16.49M
Diluted EPS
0.75
Operating cash flow
$30.84M
Free cash flow
$28.87M
Fetching…
Sources
Revenue
$739.65M
Net income
$19.88M
Diluted EPS
0.89
Operating cash flow
$23.21M
Free cash flow
$20.82M
Fetching…
Sources
Revenue
$812.89M
Net income
$20.09M
Diluted EPS
0.87
Operating cash flow
$7.64M
Free cash flow
$5.13M
Fetching…
Sources
Revenue
$704.85M
Net income
$17.43M
Diluted EPS
0.74
Operating cash flow
$66.06M
Free cash flow
$64.64M
Fetching…
Sources
Revenue
$747.50M
Net income
$17.05M
Diluted EPS
0.70
Operating cash flow
$-6.19M
Free cash flow
$-8.16M
Fetching…
Sources
Revenue
$775.58M
Net income
$16.97M
Diluted EPS
0.69
Operating cash flow
$44.83M
Free cash flow
$42.45M
Fetching…
Sources
Is it cheap or expensive?
Fair value $121.51 vs current price $57.71
Wall Street consensus is the average analyst price target: $64.50 (-46.9% lower than our fair-value estimate).
Our most-likely fair value is $121.51 a share — about 110.5% above today's price of $57.71, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $22.5M. Interest coverage 15.4x.
Net debt
$22.52M
Interest coverage
15.39x
ScanSource, Inc.'s profit covers its interest bill about 15.4 times over. which is stronger than every peer shown here.
Healthy
Worse cushion
Baseline
Better cushion
SCSC
BASELINE
ScanSource, Inc.
Total debt $110.90M Interest coverage 15.39x This is the baseline the peer rows are being compared against.
Total debt $3.48B Interest coverage 3.43x -78% vs SCSC Carries about 4.5x less debt cushion than SCSC.
Total debt $2.17B Interest coverage 4.36x -72% vs SCSC Carries about 3.5x less debt cushion than SCSC.
Total debt $6.03B Interest coverage 3.99x -74% vs SCSC Carries about 3.9x less debt cushion than SCSC.
Total debt $1.74B Interest coverage 4.43x -71% vs SCSC Carries about 3.5x less debt cushion than SCSC.
What you should know
The case for and against SCSC
3 Rewards
2 Risks
Rewards
-
Revenue grew 6.1% last year.
-
Returns 8.7% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
-
Stock trades 24.2% above its 5-year average P/E.
-
Operating margin compressed from 3.6% to 3.5% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
15.85x
Forward P/E
9.92x
P/B
1.28x
P/S
0.36x
EV/EBITDA
9.30x
PEG ratio
0.79x
Profitability
How much profit each dollar creates
Gross margin
13.6%
Operating margin
3.5%
Net margin
2.4%
ROE
8.7%
ROA
3.5%
Health
Liquidity and balance-sheet strength
Debt / equity
0.12x
Current ratio
1.75x
Quick ratio
1.11x
Total debt
$110.90M
Total cash
$88.37M
Growth
How the business has been compounding
Revenue TTM
$3.23B
Revenue 5Y CAGR
-2.2%
EPS TTM
3.64
EPS 5Y CAGR
0.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$123.13M
Free CF TTM
$113.84M
FCF margin
3.5%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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