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what it is
ScanSource sells tech, cloud, payments, and communications tools to resellers that sell them on to actual businesses.
how it gets paid
Last year Scansource made $3.0B in revenue. mobility and barcode was the main engine at $0.75B, or 25% of sales.
why growth slowed
Revenue fell 6.7% last year. $1.5B matters most because it shows ScanSource can still produce a huge quarter.
what just happened
The quarter that mattered was revenue at $1.5B, up 96% vs. prior year, with EPS hitting $1.63.
At a glance
B+ balance sheet — decent shape, but not bulletproof
50/100 earnings predictability — expect surprises
20.2x trailing p/e — priced about right
7.3% return on capital — nothing to write home about
$3.00 fy2025 eps est
xvary composite: 49/100 — below average
What they do
ScanSource sells tech, cloud, payments, and communications tools to resellers that sell them on to actual businesses.
ScanSource sits in the channel, which is finance-speak for the middle of the deal flow. Plain English: if your reseller needs barcode, POS, payments, telecom, or cloud gear from multiple vendors, ScanSource is the hub. That matters because $3.0 billion of annual revenue flows through relationships that are annoying to rebuild, even though the company only keeps a 4.0% operating margin.
How they make money
$3.0B
annual revenue · their business grew -6.7% last year
mobility and barcode
$0.75B
point-of-sale and payments
$0.72B
physical security
$0.45B
unified communications and collaboration
$0.60B
telecom and cloud services
$0.48B
The products that matter
physical technology distribution
Specialty Technology Solutions
$1.8B · 60% of revenue
it's the larger of the two operating buckets at $1.8B, which means this business still lives and dies by moving a lot of product at low margins.
scale business
communications and cloud distribution
Communications & Cloud Services
$1.2B · 40% of revenue
this $1.2B segment is big enough to matter, but it also fell 6.7%. if cloud and communications cannot offset hardware softness, the diversification story looks thinner than it sounds.
40% of revenue
end-to-end solutions initiative
Smart Series Solutions
q1 fy2026 launch · contribution not yet material
management launched it in q1 fy2026 to push beyond plain distribution. that's strategically important, but this snapshot does not show material revenue attached to it yet.
prove-it phase
Key numbers
$3.0B
annual revenue
Scale is the whole story here. ScanSource moves a lot of product, but distribution only works if that volume stays large.
4.0%
operating margin
Operating margin means profit after running the business. Plain English: ScanSource keeps 4 cents from each sales dollar before interest and taxes, so there is not much cushion.
$3.00
FY2025 EPS est.
EPS means profit per share. Plain English: Wall Street thinks each share should earn about $3.00 this year, which frames the stock's 20.2x trailing P/E.
7.3%
return on capital
Return on capital means profit generated from the money tied up in the business. Plain English: this is decent, not elite, for a distributor.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 4 — safer than 20% of stocks
- price stability 45 / 100
- long-term debt $100M (11% of capital)
B+ — functional but not a standout on the balance sheet.
Total return vs. market
Return history isn't available for SCSC right now.
source: institutional data · return history unavailable
What just happened
beat estimates
The quarter that mattered was revenue at $1.5B, up 96% vs. prior year, with EPS hitting $1.63.
The latest quarter looked far better than the full year. Annual revenue still fell 6.7% to $3.0B, which is the quiet part analysts would rather skip.
$1.5B
revenue
$1.63
eps
14.0%
gross margin
the number that mattered
$1.5B matters most because it shows ScanSource can still produce a huge quarter, but you need to see that strength repeat against a $3.0B year that shrank 6.7%.
source: company earnings report, 2026
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What could go wrong
the #1 risk here is continued revenue contraction inside a 4.0% operating-margin model.
med
the scale story breaks when sales keep falling
Revenue fell 6.7% last year to $3.0B. In distribution, lower volume does not just reduce growth. It squeezes the economics of the whole machine.
If revenue keeps shrinking, the 4.0% operating margin has very little room to absorb it.
med
smart series stays interesting but immaterial
Management launched Smart Series in q1 fy2026 to move toward higher-value solutions. That is the strategic fix. This snapshot just does not show meaningful dollars attached to it yet.
If the solutions push fails to become material, you still own a conventional distributor priced on hope for mix improvement.
med
earnings visibility is weaker than you want
Earnings predictability is 50/100 and the latest quarter missed on both eps and revenue. That combination usually means forecasting is harder than management wants it to be.
More estimate misses can keep the multiple capped even if the stock looks optically reasonable at 20.2x earnings.
A forced re-rating does not need a disaster here. Revenue staying negative and margins staying near 4.0% would be enough.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
revenue growth needs to stop being negative
Last year came in at -6.7%. You do not need explosive growth. You do need evidence the slide has stopped.
calendar
q3 fy2026 earnings
The next quarterly report should tell you whether the February miss was a bad quarter or the new baseline.
trend
smart series traction
The launch happened in q1 fy2026. Now you need signs that it is becoming financially relevant, not just strategically appealing.
risk
margin discipline
Operating margin is 4.0%. When margins start that thin, even modest execution slippage matters more than it does at higher-quality businesses.
Analyst rankings
earnings predictability
50 / 100
in human-speak, analysts do not see this as a business where the numbers land in the same place every quarter.
balance sheet grade
B+
good enough to stay out of trouble. not good enough to make the business-model risk disappear.
risk rank
4
safer than 20% of stocks. translation: this is not the safest part of the market.
source: institutional data
Institutional activity
institutional ownership data for SCSC is being compiled.
source: institutional data
Price targets
3-5 year target range
n/a
n/a
$37
current price
n/a
target midpoint · n/a from current
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