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ScanSource, Inc. (NASDAQ:SCSC), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$53.11 at one point, and dropping to the lows of US$37.12. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether ScanSource's current trading price of US$37.42 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ScanSource’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for ScanSource
What's The Opportunity In ScanSource?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 19.92% above our 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 $31.20, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that ScanSource’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of ScanSource look like?
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. ScanSource's earnings growth are expected to be in the teens in the upcoming year, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? SCSC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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?