ScanSource (NASDAQ:SCSC) Issues Earnings Results

Key Points

• Quarterly revenue surged 30.1% to $962.3 million, beating estimates, but EPS of $0.86 fell short of the $1.12 consensus and declined from $1.06 a year earlier.
• Management cited lower-margin large hardware deals and a Brazil bad-debt reserve for margin pressure, which kept profit growth well behind sales growth.
• ScanSource raised its FY2027 outlook to $3.8 billion–$4.0 billion in net sales and $175 million–$185 million in adjusted EBITDA, while reaffirming a goal of at least $85 million in free cash flow.

ScanSource (NASDAQ:SCSC - Get Free Report) released its quarterly earnings results on Thursday. The industrial products company reported $0.86 earnings per share for the quarter, missing the consensus estimate of $1.12 by ($0.26), FiscalAI reports. ScanSource had a net margin of 2.44% and a return on equity of 10.10%. The firm had revenue of $962.29 million for the quarter, compared to the consensus estimate of $860.35 million. During the same period in the previous year, the company earned $1.06 earnings per share. ScanSource's quarterly revenue was up 30.1% compared to the same quarter last year.

Here are the key takeaways from ScanSource's conference call:

• ScanSource raised its FY2027 outlook, including MicroAge, to $3.8 billion–$4.0 billion in net sales and $175 million–$185 million in adjusted EBITDA. It reaffirmed a target of at least $85 million in full-year free cash flow.
• Profitability lagged sales growth: net sales rose 30% year over year, while reported net profit increased 9%. Management attributed margin pressure to an unusually high mix of lower-margin large hardware deals—estimated to account for 110–120 basis points of compression—and a customer-specific bad-debt reserve in Brazil.
• Both segments grew sales and gross profit, with broad-based North American demand across security, networking, barcode mobility, and communications hardware. Management said the large-deal mix was unusual and expects a more balanced mix over the rest of the year.
• MicroAge expands ScanSource’s reach in cloud, cybersecurity, data center, and AI, and management sees potential to bring its managed services and AI solutions to existing channel partners. The company has begun a co-selling pilot, so the opportunity’s results are still being tested.
• Intelisys net billings grew 3.8%, and management is redirecting investment toward recruiting partners and generating new orders. The payoff may take time: the company said revenue realization can take six to nine months for smaller deals and 12 to 18 months for larger ones.

ScanSource Stock Performance

ScanSource stock traded down $2.29 during trading on Friday, reaching $42.78. The company had a trading volume of 695,826 shares, compared to its average volume of 250,830. The firm has a market capitalization of $871.43 million, a price-to-earnings ratio of 13.26, a price-to-earnings-growth ratio of 0.77 and a beta of 1.28. The company has a current ratio of 1.76, a quick ratio of 1.15 and a debt-to-equity ratio of 0.11. The firm's 50-day simple moving average is $58.51 and its 200 day simple moving average is $48.09. ScanSource has a 52 week low of $33.76 and a 52 week high of $66.78.

Insider Buying and Selling

In other news, CEO Michael L. Baur sold 57,359 shares of the firm's stock in a transaction dated Friday, September 11th. The stock was sold at an average price of $58.04, for a total value of $3,329,116.36. Following the transaction, the chief executive officer owned 200,698 shares of the company's stock, valued at $11,648,511.92. This trade represents a 22.23% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. Also, CAO Brandy Ford sold 5,293 shares of the business's stock in a transaction that occurred on Friday, September 4th. The shares were sold at an average price of $57.43, for a total value of $303,976.99. Following the transaction, the chief accounting officer owned 9,907 shares of the company's stock, valued at approximately $568,959.01. This trade represents a 34.82% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last ninety days, insiders sold 95,632 shares of company stock worth $5,484,582. Company insiders own 3.18% of the company's stock.

Wall Street Analysts Forecast Growth

A number of research analysts have weighed in on the company. Weiss Ratings raised ScanSource from a "hold (c+)" rating to a "buy (b-)" rating in a report on Thursday, October 8th. Zacks Research downgraded ScanSource from a "strong-buy" rating to a "hold" rating in a research note on Tuesday, October 20th. Wall Street Zen raised shares of ScanSource from a "buy" rating to a "strong-buy" rating in a research report on Sunday, October 25th. Barclays increased their price objective on shares of ScanSource from $43.00 to $51.00 and gave the stock an "equal weight" rating in a research note on Monday, October 12th. Finally, Northcoast Research downgraded shares of ScanSource from a "buy" rating to a "neutral" rating in a report on Monday, August 17th. One analyst has rated the stock with a Buy rating and three have issued a Hold rating to the company's stock. According to MarketBeat.com, ScanSource has an average rating of "Hold" and a consensus price target of $51.00.

Key Stories Impacting ScanSource

Here are the key news stories impacting ScanSource this week:

• Positive Sentiment: Fiscal Q1 revenue rose 30.1% year over year to $962.3 million, topping analysts’ $860.4 million estimate. ScanSource also forecast fiscal 2027 revenue of $3.8 billion to $4.0 billion, above the roughly $3.7 billion consensus. Article: ScanSource posts better-than-expected sales and guides for strong full-year sales
• Negative Sentiment: Adjusted EPS was $0.86, missing the $1.12 consensus and down from $1.06 a year earlier. The earnings miss suggests the strong sales growth has not translated into comparable per-share earnings. Article: ScanSource shares fall after lower fiscal Q1 non-GAAP earnings miss estimates
• Negative Sentiment: Shares fell below their 200-day moving average following the disappointing results, a technical signal that may add to near-term selling pressure. Article: ScanSource shares break below 200-day moving average on disappointing earnings

ScanSource Company Profile

ScanSource, Inc NASDAQ: SCSC is a technology distributor that connects manufacturers of business technology products with value-added resellers, systems integrators and other channel partners. The company provides products, services and expertise intended to help partners design, deploy and support technology solutions for business customers.

ScanSource's offerings include point-of-sale and payment technology, barcode scanners, mobile computing devices, networking equipment, cybersecurity products, communications systems and cloud-based services.

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