Please ensure Javascript is enabled for purposes of website accessibility

Why ScanSource Stock Rocketed Higher on Wednesday

By Brett Schafer – Aug 25, 2021 at 12:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company reported a strong earnings report and announced a large buyback program.

What happened

Shares of ScanSource (SCSC 0.10%) rocketed higher on Wednesday morning after the company released a strong fourth-quarter earnings report. The stock was up as much as 19.5% on the news, and as of 11:54 a.m. EDT, shares are up 19.4% for the day.

So what

After the close on Tuesday, ScanSource released its fourth-quarter and full-year earnings report. Revenue in Q4 was up 34% year over year to $852.7 million, while operating income according to generally accepted accounting principles (GAAP) came in at $23.3 million. For the full year, which encompasses the 12 months ending June 30, ScanSource's revenue was up 3.4% year over year to $3.2 billion and the company had a GAAP net income of $45.4 million.

A stock chart with a blue background going up and to the right.

Image source: Getty Images.

ScanSource announced a $100 million buyback program in conjunction with the earnings report. With a market cap under $1 billion, if ScanSource exhausts this program, it could retire a high percentage of its shares outstanding, which would benefit existing shareholders by boosting earnings per share.

For fiscal year 2022, ScanSource management is guiding for at least 5.5% sales growth and $135 million in adjusted EBITDA. Again, with a market cap under $1 billion, these are strong guidance numbers and were likely much better than what investors were expecting before the report.

Now what

ScanSource is a technology solutions company with tons of different operating segments like bar codes, point of sale, government, healthcare, and cloud services. If it can keep putting up growth and profit numbers as it did in Q4, the stock will likely perform well over the next few years. 

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ScanSource Stock Quote
$31.25 (0.10%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.