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What Is ScanSource, Inc.'s (NASDAQ:SCSC) Share Price Doing?

ScanSource, Inc. (NASDAQ:SCSC), which is in the electronic business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? 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 my valuation model. It’s trading around 13.31% above my intrinsic value, which means if you buy ScanSource today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $19.47, 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?

NasdaqGS:SCSC Past and Future Earnings April 7th 2020
NasdaqGS:SCSC Past and Future Earnings April 7th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of ScanSource, it is expected to deliver a relatively unexciting earnings growth of 9.0%, 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 conviction to buy should the price fluctuates below the true 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.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on ScanSource. You can find everything you need to know about ScanSource in the latest infographic research report. If you are no longer interested in ScanSource, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.