Discounted Cash Flow Calculation for NasdaqGS:SCSC using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
NasdaqGS:SCSC DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
ScanSource's share price is below the future cash flow value, and at a moderate discount (> 20%).
ScanSource's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
ScanSource's earnings available for a low price, and how does
this compare to other companies in the same industry?
ScanSource's earnings are expected to grow significantly at over 20% yearly.
ScanSource's revenue is expected to grow by 3.2% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
ScanSource's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Michael L. Baur, also known as Mike, Founded ScanSource, Inc. in December 1992 and has been its Chief Executive Officer since January 2000 and Chairman since February, 1, 2019. Mr. Baur served as the President of ScanSource, Inc., from December 1992 to June 2007. Prior to Scansource Inc., Mr. Baur served in various positions at Argent Technologies, Inc., including President and General Manager from April 1991 to November 1992. In September 1989, he joined Gates as Product Manager and served as Merchandising Director from February 1990 to March 1991. He has been an Executive Director of ScanSource, Inc. since December 1995.
Mike's compensation has been consistent with company performance over the past year.
Mike's remuneration is higher than average for companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the ScanSource management team is over 5 years, this suggests they are a seasoned and experienced team.
Executive VP & CFO
Vice President of Operations
Chief Technology Officer
Chief Information Officer
Vice President of Investor Relations & Treasurer
VP & General Counsel
President of Worldwide Communications & Services
Vice President of Worldwide Marketing
Vice President of Sales for Communications
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the ScanSource board of directors is about average.
The ScanSource Share Price Has Gained 11% And Shareholders Are Hoping For More
By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. … This EPS growth is significantly higher than the 11% increase in the share price. … So it seems like the market has cooled on ScanSource, despite the growth.
Is ScanSource, Inc. (NASDAQ:SCSC) Overpaying Its CEO?
Mike Baur became the CEO of ScanSource, Inc. … This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. … How Does Mike Baur's Compensation Compare With Similar Sized Companies?
Here's What ScanSource, Inc.'s (NASDAQ:SCSC) P/E Ratio Is Telling Us
The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). … ScanSource has a price to earnings ratio of 17.79, based on the last twelve months. … Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
With A 4.9% Return On Equity, Is ScanSource, Inc. (NASDAQ:SCSC) A Quality Stock?
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. … One way to conceptualize this, is that for each $1 of shareholders' equity it has, the company made $0.049 in profit. … Return on Equity = Net Profit ÷ Shareholders' Equity
Should You Be Worried About Insider Transactions At ScanSource, Inc. (NASDAQ:SCSC)?
So shareholders might well want to know whether insiders have been buying or selling shares in ScanSource, Inc. … In the last twelve months, the biggest single sale by an insider was when Director Charles Whitchurch sold US$239k worth of shares at a price of US$42.00 per share. … It is certainly not great to see that insiders have sold shares in the company
ScanSource, Inc. (NASDAQ:SCSC) Is Trading At A 44.69% Discount
by estimating the company's future cash flows and discounting them to their present value. … discounted cash flows (DCF). … If you want to learn more about discounted cash flow, the basis for my calcs can be read in detail in the Simply Wall St analysis model
How Financially Strong Is ScanSource Inc (NASDAQ:SCSC)?
While small-cap stocks, such as ScanSource Inc (NASDAQ:SCSC) with its market cap of US$974m, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. … Evaluating financial health as part of your investment thesis is
ScanSource Inc (NASDAQ:SCSC): Assessing Capital Returns
and want a simplistic look at the return on ScanSource Inc (NASDAQ:SCSC) stock. … Therefore, looking at how efficiently ScanSource is able to use capital to create earnings will help us understand your potential return. … Investors use many different metrics but the analysis below focuses on return on capital employed (ROCE).
How Should Investors React To ScanSource Inc's (NASDAQ:SCSC) CEO Pay?
How Does Mike Baur's Compensation Compare With Similar Sized Companies. … We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO compensation was US$1m. … Thus we can conclude that Mike Baur receives more in total compensation than the median of a group of companies in the same market, and of similar size to ScanSource Inc
Are ScanSource Inc's (NASDAQ:SCSC) Interest Costs Too High?
Investors are always looking for growth in small-cap stocks like ScanSource Inc (NASDAQ:SCSC), with a market cap of US$1.09b. … However, an important fact which most ignore is: how financially healthy is the business? … Evaluating financial health as part of your investment thesis is
ScanSource, Inc. distributes technology products and solutions in North America, Latin America, and Europe. It operates in two segments, Worldwide Barcode, Networking & Security (WW Barcode, Networking & Security); and Worldwide Communications & Services (WW Communications & Services). The WW Barcode, Networking & Security segment offers a portfolio of solutions primarily for enterprise mobile computing, data capture, barcode printing, point of sale (POS), payments, networking, electronic physical security, cyber security, and other technologies. This segment offers data capture and POS solutions to automate the collection, processing, and communication of information for commercial and industrial applications, including retail sales, distribution, shipping, inventory control, materials handling, warehouse management, and health care applications. It also provides electronic physical security products, such as identification, access control, video surveillance, intrusion-related, and wireless and networking infrastructure products; and video conferencing, cloud, POS portal, and other services. The WW Communications & Services segment offers a portfolio of solutions primarily for communications technologies and services comprising voice, video conferencing, wireless, data networking, cable, unified communications and collaboration, cloud, and technology services, as well as IP networks and other solutions for various vertical markets comprising education, healthcare, and government. It also provides professional, contact center, and infrastructure services; and distributes communications technologies, digital networks, and cyber security products. The company also offers pre-sale business tools and value-added services that include market and technology solution, education and training, product configuration tool, technical support, logistics, and channel financial services. ScanSource, Inc. was founded in 1992 and is headquartered in Greenville, South Carolina.
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