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1. Company Snapshot

1.a. Company Description

ScanSource, Inc.distributes technology products and solutions in the United States, Canada, and internationally.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, intrusion-related, and wireless and networking infrastructure products.


The Modern Communications & Cloud segment offers a portfolio of solutions primarily for communications technologies and services comprising voice, video conferencing, wireless, data networking, 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.

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1.b. Last Insights on SCSC

ScanSource's recent performance is driven by its efforts to enhance operational efficiency, lower debt, and drive growth through acquisitions. The company's Q1 earnings beat estimates, with a quarterly earnings of $0.84 per share, surpassing the consensus estimate of $0.77 per share. Additionally, ScanSource's upgrade to a Strong Buy rating by analysts suggests growing optimism about its earnings prospects. The company's focus on operational efficiency and debt reduction, as well as its acquisition-driven growth strategy, are key drivers of its recent momentum.

1.c. Company Highlights

2. ScanSource's Q2 Earnings Miss Expectations Amidst Margin Pressures

ScanSource reported a 3% year-over-year increase in net sales, but the company's profitability was impacted by unexpected expenses, resulting in declines in gross profit and EBITDA margins. The earnings per share (EPS) came in at $0.8, missing estimates of $1. Despite strong free cash flow, the company's adjusted EBITDA margin for the Intelisys and Advisory segment was 41%. The revenue growth was driven by both segments, with gross profits increasing 1% year over year.

Publication Date: Mar -07

📋 Highlights
  • Profitability Challenges:: Unexpected expenses impacted gross profit and EBITDA margins despite 1% year-over-year gross profit growth and 41% adjusted EBITDA margin in the Intelisys segment.
  • Converged Sales Strategy:: Launched a unified communication sales team to integrate products and Intelisys services, enhancing partners' ability to sell hardware and cloud solutions.
  • Financial Strength:: Ended Q2 with $83 million in cash, zero net debt leverage ratio, and 11.9% adjusted ROIC, reflecting a robust balance sheet.
  • Revised Guidance:: Full-year revenue projected at $3 billion–$3.1 billion, adjusted EBITDA at $140 million–$150 million, and free cash flow of at least $80 million, citing slower large-deal growth.
  • Market Dynamics:: Competitive TSD market pressures persist due to organic growth demands, with ScanSource avoiding acquisitive strategies unlike peers.

Segment Performance and New Initiatives

The company launched a new converged communication sales team, unifying its communications products and Intelisys products and services. This move aims to provide a unified sales experience for partners, enabling them to sell hardware and recurring cloud business. As Michael L. Baur, Chair and CEO, noted, this new team will benefit the partner community. The company's efforts to restructure its Intelisys business and adapt to the competitive environment in the TSD market are also underway.

Financial Position and Guidance

ScanSource ended the quarter with approximately $83 million in cash and a net debt leverage ratio of zero on a trailing twelve-month adjusted EBITDA basis. The company updated its full-year projections, expecting revenue to be in the range of $3 billion to $3.1 billion and adjusted EBITDA to be in the range of $140 million to $150 million. Annual free cash flow is expected to be at least $80 million. With an adjusted ROIC of 11.9% for the quarter and 13.3% for the year, the company's return on investment is notable.

Valuation and Growth Expectations

With a P/E Ratio of 10.71 and an EV/EBITDA of 6.27, the company's valuation appears reasonable. Analysts estimate revenue growth at 4.0% for next year, indicating a moderate growth trajectory. The company's Free Cash Flow Yield is 15.04%, suggesting a decent return for investors. As the company navigates the competitive TSD market and executes its new initiatives, investors will be watching for progress in the coming quarters.

3. NewsRoom

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ScanSource Appoints Mark Morgan as President of Specialty Technologies

Mar -05

Source: businesswire.com

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ScanSource Q2 Earnings Call Highlights

Feb -06

Source: defenseworld.net

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ScanSource, Inc. (SCSC) Q2 2026 Earnings Call Transcript

Feb -05

Source: seekingalpha.com

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ScanSource (SCSC) Q2 Earnings and Revenues Lag Estimates

Feb -05

Source: zacks.com

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ScanSource, Inc. (NASDAQ:SCSC) Short Interest Up 21.8% in January

Feb -05

Source: defenseworld.net

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ScanSource (NASDAQ:SCSC) Stock Price Passes Above 200 Day Moving Average – Time to Sell?

Jan -30

Source: defenseworld.net

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ScanSource Named a Fortune World's Most Admired Company for 10 Consecutive Years

Jan -27

Source: businesswire.com

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SCSC or SYM: Which Is the Better Value Stock Right Now?

Dec -30

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.33%)

6. Segments

Specialty Technology Solutions

Expected Growth: 8.97%

ScanSource's Specialty Technology Solutions segment growth of 8.97% is driven by increasing demand for cloud-based solutions, cybersecurity, and data analytics. Additionally, the company's strategic acquisitions and partnerships have expanded its product offerings and geographic reach, contributing to the segment's growth.

Modern Communications & Cloud

Expected Growth: 9.9%

ScanSource's Modern Communications & Cloud segment growth of 9.9% is driven by increasing demand for cloud-based unified communication solutions, growing adoption of Microsoft Teams and Zoom, and rising need for secure remote work infrastructure. Additionally, the company's strategic partnerships and expanded product offerings in cloud and cybersecurity contribute to the segment's growth.

7. Detailed Products

Barcode Scanners

ScanSource offers a wide range of barcode scanners from leading manufacturers, designed to improve inventory management, track assets, and enhance supply chain efficiency.

Point of Sale (POS) Systems

ScanSource provides POS systems that enable businesses to process transactions, manage inventory, and analyze sales data, all in one integrated solution.

Mobile Computers

ScanSource offers a range of mobile computers designed for use in warehouses, retail stores, and other environments, enabling workers to scan, track, and manage inventory on-the-go.

Printers and Printing Supplies

ScanSource provides a wide range of printers and printing supplies, including thermal printers, label printers, and barcode printers, designed for use in various industries.

Kiosks and Self-Service Solutions

ScanSource offers kiosks and self-service solutions that enable customers to interact with businesses in a convenient and efficient manner.

Security and Surveillance Solutions

ScanSource provides security and surveillance solutions, including IP cameras, access control systems, and video management software, designed to enhance safety and security.

Communication and Collaboration Solutions

ScanSource offers communication and collaboration solutions, including video conferencing systems, audio conferencing systems, and unified communication platforms.

8. ScanSource, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for ScanSource, Inc. is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for ScanSource, Inc. is high due to the concentration of large customers and the availability of alternative suppliers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for ScanSource, Inc. is low due to the company's large scale of operations and its ability to negotiate better prices.

Threat Of New Entrants

The threat of new entrants for ScanSource, Inc. is low due to the high barriers to entry in the industry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for ScanSource, Inc. is high due to the presence of several established competitors in the market, leading to a highly competitive environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.97%
Debt Cost 8.19%
Equity Weight 73.03%
Equity Cost 11.47%
WACC 10.58%
Leverage 36.92%

11. Quality Control: ScanSource, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Avnet

A-Score: 5.5/10

Value: 7.3

Growth: 5.4

Quality: 3.2

Yield: 6.0

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
PC Connection

A-Score: 5.1/10

Value: 5.6

Growth: 5.7

Quality: 6.0

Yield: 2.0

Momentum: 2.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Climb Global Solutions

A-Score: 4.9/10

Value: 5.3

Growth: 8.2

Quality: 6.5

Yield: 2.0

Momentum: 3.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
ScanSource

A-Score: 4.5/10

Value: 8.0

Growth: 4.6

Quality: 5.7

Yield: 0.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
LSI Industries

A-Score: 4.5/10

Value: 4.7

Growth: 6.3

Quality: 5.9

Yield: 3.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Snap One

A-Score: 4.1/10

Value: 7.0

Growth: 6.7

Quality: 3.1

Yield: 0.0

Momentum: 6.0

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

36.46$

Current Price

36.46$

Potential

-0.00%

Expected Cash-Flows