SCSC
ScanSource, Inc.
Technology · Technology Distributors
Undervalued·Quality 65·RSI 50·DCF +38%·Conviction 67
Investment Thesis — ScanSource, Inc.
ScanSource is being mispriced as a structurally declining distributor, but the market underestimates its sticky enterprise relationships and the resilience of its recurring software and services mix. The recent selloff reflects short-term margin pressures, not a permanent impairment of earnings power.
Catalysts
- Rebound in enterprise IT spending
- Growth in recurring software/services revenue
- Share buybacks or accretive M&A
Risk Factors
- Prolonged tech capex downturn
- Loss of key vendor/customer relationships
- Execution missteps in services transition
Key Debates
Fwd Rev Growth exceeds 2% by Q4, re-rating P/E above 12x
Sustained EPS growth justifies P/E expansion to 11x by H2
SCSC price reaches $43.00 by Q3 as Fwd P/E expands to 10.5x