ScanSource Shares Soar 6.28% on Earnings, Guidance

ScanSource (SCSC) shares surged 6.28% today, marking the third consecutive day of gains, with a cumulative increase of 11.83% over the past three days. The stock price reached its highest level since February 2025, with an intraday gain of 7.06%.

The strategy of buying SCSC shares after they reached a recent high and holding for 1 week yielded moderate returns over the past 5 years. The ScanSource Inc. (SCSC) share price increased by 65% over the last five years, although this was slightly below the market return. The annualized growth rate of the share price was approximately 11%, which outpaced the company's earnings growth rate of about 4.7% per year. This indicates that the market may have had a higher opinion of the business than reflected in its earnings, potentially due to factors such as growth in revenue and improved profitability margins.

However, the strategy faced challenges, particularly in the short-term. The stock price experienced a significant drop of 20% in the last year, which may have impacted the overall returns if the investor was not prepared for such volatility. Additionally, the company's revenue fell short of market expectations in Q1 CY2025, with sales declining by 6.3% year-on-year to $704.8 million, which could raise concerns about the sustainability of the company's growth.

In conclusion, while the strategy of buying SCSC shares after a recent high and holding for 1 week showed potential in the long term, it was not without risks. The fluctuating stock prices and the recent revenue miss highlight the importance of considering both the long-term growth prospects and the short-term challenges when making investment decisions.

ScanSource recently reported its third-quarter financial results, which showed a net income of $17.4 million and a profit of 74 cents per share. Despite beating earnings expectations, the company's revenue of $704.85 million fell short of the anticipated $777.92 million. This discrepancy in revenue performance may have contributed to the recent volatility in the stock price.

Additionally, ScanSource adjusted its net sales guidance for the fiscal year 2025, lowering it from the previous range of $3.1 billion to $3.5 billion to approximately $3.0 billion. This revision in sales outlook could influence investor sentiment and affect the stock price, as it indicates a more conservative approach to future revenue projections.

The company's Board of Directors authorized a $200 million share repurchase program, which could impact the stock price by altering the supply and demand dynamics. Share repurchases typically signal confidence in the company's future prospects and can support the stock price by reducing the number of shares outstanding.

Northcoast Research upgraded ScanSource from a "neutral" rating to a "buy" rating, setting a target price of $42.00. This rating upgrade could boost investor confidence and influence the stock's performance, as it suggests a positive outlook for the company's future growth and profitability.