ScanSource Q1 sales beat estimates on strong demand

Overview

• US technology distributor's Q1 net sales rose 30% yr/yr, driven by strong demand

• Adjusted EPS for Q1 missed analyst expectations

• Company completed MicroAge acquisition to expand technology solutions

Outlook

• ScanSource raises FY27 net sales outlook to $3.8 bln-$4.0 bln

• Company lifts FY27 adjusted EBITDA forecast to $175 mln-$185 mln

• ScanSource maintains FY27 free cash flow forecast at at least $85 mln

Result Drivers

• SALES MIX - Gross profit margin fell due to strong hardware demand and a higher proportion of lower-margin, large deals

• BAD DEBT EXPENSE - Higher bad debt expense, mainly from customer credit exposures in Brazil, weighed on operating income and EPS

• ACQUISITION IMPACT - MicroAge acquisition contributed to segment growth and expanded technology solutions

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is no "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the computer hardware peer group is "buy."

• Wall Street's median 12-month price target for ScanSource, Inc. is $64.50, about 13.2% above its November 4 closing price of $56.98

• The stock recently traded at 11 times the next 12-month earnings vs. a P/E of 13 three months ago

Reuters Recommended Reads

• Nov 4 - CDW Q3 sales beat estimates on financial services segment

• Nov 5 - Insight Enterprises Q3 sales beat estimates, lifts gross profit growth outlook

• Nov 5 - Arrow Electronics Q3 revenue beats estimates, helped by AI demand

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)