It's shaping up to be a tough period for ScanSource, Inc. (NASDAQ:SCSC), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. It looks like a clear earnings miss, with both revenues and earnings falling well short of analyst predictions. Revenues of US$747m missed by 12%, and statutory earnings per share of US$0.70 fell short of forecasts by 12%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ScanSource after the latest results.
View our latest analysis for ScanSource
Taking into account the latest results, the most recent consensus for ScanSource from three analysts is for revenues of US$3.18b in 2025. If met, it would imply a credible 5.1% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 4.9% to US$2.81. Before this earnings report, the analysts had been forecasting revenues of US$3.28b and earnings per share (EPS) of US$3.16 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.
The analysts made no major changes to their price target of US$55.00, suggesting the downgrades are not expected to have a long-term impact on ScanSource's valuation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that ScanSource's rate of growth is expected to accelerate meaningfully, with the forecast 10% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 3.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that ScanSource is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded ScanSource's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple ScanSource analysts - going out to 2026, and you can see them free on our platform here.
It might also be worth considering whether ScanSource's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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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.