One-glance verdict
Undervalued
$93.45 our estimate vs market $56.72
Wall Street consensus: $60.50 (-35.3% lower than our fair-value estimate)
39% below our estimate, below the bear case
Fundamentals snapshot
ScanSource, Inc.
SCSC · NMS · Technology · Electronics & Computer Distribution
Current price
$56.72
52-week range
$33.76 - $66.78
Market cap
$1.14B
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 24.1% 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 acts as a large-scale distributor, selling essential business technology like barcode scanners for warehouses and payment systems for retail stores. The company earns most of its revenue (the total money brought in from sales) from this hardware, but it also helps other partners sell services like internet connectivity and cloud storage. This is important because ScanSource is a key link in the technology supply chain (the path a product takes from the company that makes it to the business that uses it), helping thousands of companies get the tools they need to operate.
How the company got here
ScanSource was founded in 1992 to take advantage of the growing use of barcode scanning in stores and warehouses. The company started by supplying businesses with the necessary tools like scanners and printers. It went public just two years after its founding and expanded into telecommunications and security cameras. A major turning point was the 2016 acquisition of a company called Intelisys, which moved ScanSource into the world of cloud-based services and recurring revenue (income that is predictable and likely to continue in the future).
What it actually does
Think of ScanSource as a middleman in the technology world. They don't make the technology products themselves, but instead connect the companies that do (like makers of barcode scanners, payment terminals, and video conferencing equipment) with other businesses that sell and install these products for end users like retailers, hospitals, and warehouses. ScanSource essentially acts as a one-stop-shop, providing not just the hardware, but also software, technical support, and financial services to help their partners create complete solutions for their customers. They help businesses that sell technology by giving them access to a wide range of products and the expertise to put them all together.
Specialty Technology Solutions
This is ScanSource's original and largest business, generating the majority of its revenue. This segment is all about distributing physical hardware and related software. The products include things you might see every day, like the point-of-sale systems at a checkout counter, barcode scanners used for inventory in a warehouse, and video surveillance cameras for security. Businesses that need to track products, take payments, or secure their buildings pay other companies (ScanSource's partners) who buy this equipment from ScanSource.
Intelisys & Advisory
This is a newer and smaller, but growing, part of the company focused on services rather than physical products. This segment helps businesses connect to the cloud and use software-based services for things like communication systems (think video conferencing and call centers), data storage, and cybersecurity. Instead of a one-time hardware sale, this part of the business often generates recurring revenue (a steady, predictable income stream from ongoing subscriptions). Their customers are businesses of all sizes that pay for these ongoing technology services.
What management is betting on now
Management is focused on what they call "hybrid distribution," which means combining their traditional hardware business with their newer cloud and subscription services. They are encouraging their partners who traditionally sold only hardware to also sell cloud-based services, creating more complete solutions for customers. A key priority is to increase recurring revenue (the predictable income from subscriptions), which makes the company's performance more stable over time. They are also making strategic acquisitions, like the recent purchase of MicroAge, to add higher-margin (more profitable) technology solutions and expand their expertise in areas like cloud, cybersecurity, and AI.
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 $93.45 vs current price $56.72
Wall Street consensus is the average analyst price target: $60.50 (-35.3% lower than our fair-value estimate).
Our most-likely fair value is $93.45 a share — about 64.8% above today's price of $56.72, 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 $4.72B 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 24.1% 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)
15.84x
Forward P/E
9.96x
P/B
1.26x
P/S
0.35x
EV/EBITDA
9.14x
PEG ratio
0.80x
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
3.58
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
—
Payout ratio
0.0%
Last ex-div date
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