Value
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.8 |
| P/S | 10.0 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.1 |
| PEG | 8.4 |
| Analyst target | 3.0 |
- ▸Forward P/E: 11.6x
- ▸PEG: 0.77
- ▸Attractively valued
SCSC · Why this verdict
Why ScanSource (SCSC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Weak growth stands as a headwind for ScanSource against the otherwise cheap valuation and cash-generative profile. Bear case | Revenue and earnings growth rates should show clear acceleration over the next two reported quarters. | →Stable |
| CounterAs an IT distributor, ScanSource's growth is heavily tied to end-customer hardware refresh cycles, and a period of weak growth may simply reflect a temporary industry-wide lull. | ||
ScanSource trades at a forward P/E of 11.5x with a PEG of 0.77, backed by excellent cash conversion of 146% FCF/NI and a strong Piotroski F-Score of 8 out of 9. Valuation breakdown | The PEG ratio should stay below 1.0 and cash conversion should remain above 100% over the next 12 months. | →Stable |
| CounterWeak growth flagged elsewhere could make the cheap multiple a value trap rather than a mispricing if growth doesn't reaccelerate. | ||
ScanSource has beaten consensus EPS in 3 of its last 4 quarters, and analyst estimates have risen 60% over the past 30 days, a strong revision signal. Catalyst breakdown | The beat streak should extend and estimates should continue trending upward through the next reported quarter on 2026-08-20. | →Stable |
| CounterA 60% estimate revision in just 30 days is a large move that could reflect a low starting base or a one-time item rather than a durable re-rating of the earnings outlook. | ||
The risk-adjusted asymmetry ratio is negative at -0.91, with the analyst target already reached and -8.7% implied upside against 9.6% downside, explaining the reduce-position stance. Warnings | The asymmetry ratio should turn positive as either price consolidates lower or analyst targets are revised upward following the rising estimates. | →Stable |
| CounterThe 60% rise in analyst estimates over the past 30 days could quickly translate into higher price targets, flipping the asymmetry ratio positive. | ||
Weak growth stands as a headwind for ScanSource against the otherwise cheap valuation and cash-generative profile.
→StableBear case
- Expectation
- Revenue and earnings growth rates should show clear acceleration over the next two reported quarters.
CounterAs an IT distributor, ScanSource's growth is heavily tied to end-customer hardware refresh cycles, and a period of weak growth may simply reflect a temporary industry-wide lull.
ScanSource trades at a forward P/E of 11.5x with a PEG of 0.77, backed by excellent cash conversion of 146% FCF/NI and a strong Piotroski F-Score of 8 out of 9.
→StableValuation breakdown
- Expectation
- The PEG ratio should stay below 1.0 and cash conversion should remain above 100% over the next 12 months.
CounterWeak growth flagged elsewhere could make the cheap multiple a value trap rather than a mispricing if growth doesn't reaccelerate.
ScanSource has beaten consensus EPS in 3 of its last 4 quarters, and analyst estimates have risen 60% over the past 30 days, a strong revision signal.
→StableCatalyst breakdown
- Expectation
- The beat streak should extend and estimates should continue trending upward through the next reported quarter on 2026-08-20.
CounterA 60% estimate revision in just 30 days is a large move that could reflect a low starting base or a one-time item rather than a durable re-rating of the earnings outlook.
The risk-adjusted asymmetry ratio is negative at -0.91, with the analyst target already reached and -8.7% implied upside against 9.6% downside, explaining the reduce-position stance.
→StableWarnings
- Expectation
- The asymmetry ratio should turn positive as either price consolidates lower or analyst targets are revised upward following the rising estimates.
CounterThe 60% rise in analyst estimates over the past 30 days could quickly translate into higher price targets, flipping the asymmetry ratio positive.
TrendMatrix Research · core thesis
Engine thesis — one sentence
ScanSource combines a cheap, cash-generative valuation and rising analyst estimates with a weak-growth headwind and a negative risk-adjusted asymmetry ratio, consistent with a call to consider reducing the position.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.7 |
| ROA | 2.3 |
| Gross margin | 0.0 |
| Op margin | 1.2 |
| Net margin | 1.2 |
| Current ratio | 6.6 |
| FCF quality | 9.9 |
| Moat | 5.8 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 146% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
3.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.7 |
| EPS growth | 3.1 |
Momentum
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 1.9 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.9 |
| erm sentiment | 5.0 |
Insider
7.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 9.9 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.7 |
| quality rank | 3.6 |
| growth rank | 2.9 |
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.0 |
| support resistance | 2.5 |
| 52w position | 9.4 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.4 |
| days to cover | 4.9 |
| volatility | 6.3 |
| put call | 10.0 |
| implied vol | 2.0 |
| max pain risk | 3.0 |
| beta | 5.9 |
| debt equity | 9.5 |
- ▸High IV: 68%
- ▸Above max pain $40
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.2 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.6>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:44d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.2=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.16
Upside
-10.0%
Downside
8.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($1.0B) below institutional reach
SuitabilityAggressive — MCap $1.0B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.16 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.5, Value at 7.4, and Risk (lower is worse) at 5.9; the weakest are Growth at 3.9, Quality at 4.3, and Peer rank at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.16 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cheap Valuation With Cash Conversion
Trip ifPEG ratio rises above 1.5 without a corresponding change in the growth outlook.
- P2Earnings Beat Streak With Rising Estimates
Trip ifScanSource's EPS surprise falls below 0% in the report on 2026-08-20.
- P3Weak Growth Headwind
Trip ifRevenue growth stays below 3% YoY for 2 consecutive quarters.
- P4Negative Asymmetry Caps Add
Trip ifThe risk-adjusted asymmetry ratio stays below -0.5 for 2 consecutive quarters.