ScanSource, Inc. (SCSC) DCF Valuation & Fundamental Primer
ScanSource, Inc. (SCSC) currently trades at — with an enterprise value of $1.23B. Our proprietary institutional model rates ScanSource, Inc. at 80/100 (Grade: A · High-Quality Compounder).
Institutional fundamental teardown of ScanSource, Inc. (SCSC) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
ScanSource, Inc. (SCSC) 3-Scenario DCF Valuation Range
Stress-test SCSC's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: —).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $186.30 N/M | $196.80 N/M | $209.05 N/M | $223.53 N/M | $240.91 N/M |
| 9.3% | $169.01 N/M | $177.28 N/M | $186.78 N/M | $197.80 N/M | $210.74 N/M |
| 10.0% | $154.76 N/M | $161.42 N/M | $168.96 N/M | $177.57 N/M | $187.51 N/M |
| 10.8% | $142.83 N/M | $148.26 N/M | $154.36 N/M | $161.25 N/M | $169.08 N/M |
| 11.5% | $132.67 N/M | $137.18 N/M | $142.20 N/M | $147.80 N/M | $154.10 N/M |
Institutional Software Quality Scorecard (80/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 122% of EBIT driven by upfront annual collections
- Low dilution friction: SBC is only 0.4% of revenue
- Net cash positive: $117.1M balance sheet buffer
Key Operational & Dilution Risks
- Lower software gross margins (13.4%), indicating higher hosting or service delivery drag
ScanSource, Inc. (SCSC) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $3.04B | $3.04B | $3.01B | $2.99B | $2.96B | $2.94B | $2.91B |
| Gross Profit | $408.6M | $408.7M | $405.1M | $401.5M | $398.0M | $394.5M | $391.0M |
| Operating Income (EBIT) | $85.2M | $85.1M | $84.4M | $83.7M | $82.9M | $82.2M | $81.5M |
| Stock-Based Compensation (SBC) | $11.1M | $10.9M | $10.9M | $10.8M | $10.7M | $10.6M | $10.5M |
| Unlevered Free Cash Flow (FCF) | $104.1M | $104.0M | $103.1M | $102.2M | $101.3M | $100.4M | $99.5M |
| SBC-Adjusted True Cash Flow | $93.0M | $93.0M | $92.2M | $91.4M | $90.6M | $89.8M | $89.0M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -30.2 + 0.82 × (Rule of 40) · R² = 79%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| ScanSource, Inc. | SCSC | — | $3.04B | 13.4% | 3.4% | 2.5% | 0.4% | — |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 0.1× | $431.5M | $548.6M | $25.00 | 0.0% |
| -20% Multiple Compression | 0.1× | $345.2M | $462.3M | $21.07 | -20.0% |
| -35% Multiple Compression | 0.1× | $280.5M | $397.5M | $18.12 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $15.20B | $15.32B | $698.24 | +3423.5% |
Frequently Asked Questions: ScanSource, Inc. (SCSC) Valuation
What is ScanSource, Inc. (SCSC)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, ScanSource, Inc. (SCSC) has a Base Case implied value of N/A per share (with a Bear Case of N/A and a Bull Case of N/A), compared to its current price of market price. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is ScanSource, Inc. (SCSC)'s Rule of 40 score and Free Cash Flow margin?
ScanSource, Inc. achieves a Rule of 40 score of 2.5%, combining a -0.9% revenue growth run-rate with a 3.4% TTM free cash flow margin on $3.04B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into SCSC stock according to Reverse-DCF analysis?
At market price per share (Enterprise Value of N/A), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of -0.9%, compared to ScanSource, Inc.'s historical CAGR of -0.9%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does ScanSource, Inc. compare to Software & Cloud Services software peers?
ScanSource, Inc. (SCSC) earns an institutional Software Quality Score of 80/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact ScanSource, Inc. (SCSC)'s valuation?
ScanSource, Inc. recorded $11.1M in TTM stock-based compensation (0.4% of revenue). When treating SBC as a cash-equivalent compensation expense, ScanSource, Inc.'s SBC-adjusted free cash flow yield is evaluated directly in our 3-statement model, scoring 25/25 on our Shareholder Dilution Friction pillar.