Yahoo Finance When Should You Buy ScanSource, Inc. (NASDAQ:SCSC)?
While ScanSource, Inc. (NASDAQ:SCSC) might not have the largest market cap around , it saw a significant share price rise of 22% in the past couple of months on the NASDAQGS. The recent share price gains has brought the company back closer to its yearly peak. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at ScanSource’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for ScanSource
What Is ScanSource Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 0.28% above our intrinsic value, which means if you buy ScanSource today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $42.70, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because ScanSource’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of ScanSource look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of ScanSource, it is expected to deliver a relatively unexciting earnings growth of 3.7%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for ScanSource, at least in the near term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in SCSC’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on SCSC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for ScanSource and you'll want to know about it.
If you are no longer interested in ScanSource, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
