LSE:SCT

Stock Analysis Report

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Market Cap

UK£3.5b

Last Updated

2021/06/21 05:49 UTC

Data Sources

Company Financials +

Executive Summary

Softcat plc primarily acts as a value-added IT reseller and IT infrastructure solutions provider in the United Kingdom. More Details


Snowflake Analysis

Flawless balance sheet with proven track record.


Similar Companies

Share Price & News

How has Softcat's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SCT is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: SCT's weekly volatility (6%) has been stable over the past year.


Market Performance


7 Day Return

-4.0%

SCT

-2.6%

GB IT

-1.7%

GB Market


1 Year Return

59.8%

SCT

33.1%

GB IT

16.0%

GB Market

Return vs Industry: SCT exceeded the UK IT industry which returned 33.1% over the past year.

Return vs Market: SCT exceeded the UK Market which returned 16% over the past year.


Shareholder returns

SCTIndustryMarket
7 Day-4.0%-2.6%-1.7%
30 Day-1.5%-1.9%-0.04%
90 Day11.8%3.9%5.4%
1 Year63.8%59.8%35.7%33.1%21.6%16.0%
3 Year156.0%133.3%57.9%49.0%11.6%-1.3%
5 Year606.8%480.0%186.7%150.6%51.8%23.3%

Long-Term Price Volatility Vs. Market

How volatile is Softcat's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Softcat undervalued compared to its fair value and its price relative to the market?

38.91x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SCT (£17.43) is trading above our estimate of fair value (£7.83)

Significantly Below Fair Value: SCT is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: SCT is good value based on its PE Ratio (38.9x) compared to the UK IT industry average (41.1x).

PE vs Market: SCT is poor value based on its PE Ratio (38.9x) compared to the UK market (25.1x).


Price to Earnings Growth Ratio

PEG Ratio: SCT is poor value based on its PEG Ratio (9.6x)


Price to Book Ratio

PB vs Industry: SCT is overvalued based on its PB Ratio (24.6x) compared to the GB IT industry average (4.3x).


Future Growth

How is Softcat forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

4.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SCT's forecast earnings growth (4.1% per year) is above the savings rate (0.9%).

Earnings vs Market: SCT's earnings (4.1% per year) are forecast to grow slower than the UK market (17.7% per year).

High Growth Earnings: SCT's earnings are forecast to grow, but not significantly.

Revenue vs Market: SCT's revenue (8% per year) is forecast to grow faster than the UK market (5.3% per year).

High Growth Revenue: SCT's revenue (8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SCT's Return on Equity is forecast to be very high in 3 years time (48.7%).


Past Performance

How has Softcat performed over the past 5 years?

21.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SCT has a high level of non-cash earnings.

Growing Profit Margin: SCT's current net profit margins (7.9%) are higher than last year (6.8%).


Past Earnings Growth Analysis

Earnings Trend: SCT's earnings have grown significantly by 21.5% per year over the past 5 years.

Accelerating Growth: SCT's earnings growth over the past year (20%) is below its 5-year average (21.5% per year).

Earnings vs Industry: SCT earnings growth over the past year (20%) exceeded the IT industry -10.9%.


Return on Equity

High ROE: SCT's Return on Equity (63.3%) is considered outstanding.


Financial Health

How is Softcat's financial position?


Financial Position Analysis

Short Term Liabilities: SCT's short term assets (£369.1M) exceed its short term liabilities (£244.3M).

Long Term Liabilities: SCT's short term assets (£369.1M) exceed its long term liabilities (£9.9M).


Debt to Equity History and Analysis

Debt Level: SCT is debt free.

Reducing Debt: SCT has not had any debt for past 5 years.

Debt Coverage: SCT has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: SCT has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet


Dividend

What is Softcat current dividend yield, its reliability and sustainability?

1.17%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: SCT's dividend (1.17%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.29%).

High Dividend: SCT's dividend (1.17%) is low compared to the top 25% of dividend payers in the UK market (4.07%).


Stability and Growth of Payments

Stable Dividend: SCT has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: SCT's dividend payments have increased, but the company has only paid a dividend for 5 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (51.3%), SCT's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SCT's dividends in 3 years are forecast to be covered by earnings (56% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.2yrs

Average management tenure


CEO

Graeme Watt (58 yo)

3.17yrs

Tenure

UK£991,372

Compensation

Mr. Graeme A. Watt has been the Chief Executive Officer and Director of Softcat plc since April 1, 2018. Mr. Watt serves as the President for EMEA Operations at Tenva TS Holdings Limited (formerly, Avnet T...


CEO Compensation Analysis

Compensation vs Market: Graeme's total compensation ($USD1.37M) is about average for companies of similar size in the UK market ($USD1.65M).

Compensation vs Earnings: Graeme's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: SCT's management team is considered experienced (3.2 years average tenure).


Board Members

Experienced Board: SCT's board of directors are considered experienced (3.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Softcat plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Softcat plc
  • Ticker: SCT
  • Exchange: LSE
  • Founded: 1987
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Market Cap: UK£3.457b
  • Shares outstanding: 198.33m
  • Website: https://www.softcat.com

Number of Employees


Location

  • Softcat plc
  • Solar House
  • Fieldhouse Lane
  • Marlow
  • Buckinghamshire
  • SL7 1LW
  • United Kingdom

Listings


Biography

Softcat plc primarily acts as a value-added IT reseller and IT infrastructure solutions provider in the United Kingdom. The company advices, procures, designs, implements, and manages technology, such as s...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/06/21 05:49
End of Day Share Price2021/06/18 00:00
Earnings2021/01/31
Annual Earnings2020/07/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.