It's been a pretty great week for ScanSource, Inc. (NASDAQ:SCSC) shareholders, with its shares surging 11% to US$45.90 in the week since its latest quarterly results. It was a workmanlike result, with revenues of US$767m coming in 6.1% ahead of expectations, and statutory earnings per share of US$0.78, in line with analyst appraisals. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from ScanSource's three analysts is for revenues of US$3.20b in 2027. This reflects a credible 3.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 6.7% to US$3.85. In the lead-up to this report, the analysts had been modelling revenues of US$3.18b and earnings per share (EPS) of US$3.82 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
See our latest analysis for ScanSource
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 5.8% to US$54.67. It looks as though they previously had some doubts over whether the business would live up to their expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic ScanSource analyst has a price target of US$71.00 per share, while the most pessimistic values it at US$43.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that ScanSource is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.9% annualised growth until the end of 2027. If achieved, this would be a much better result than the 2.0% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually for the foreseeable future. Although ScanSource's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple ScanSource analysts - going out to 2028, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for ScanSource that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.