Softcat (SCT) AI Stock Analysis

• Market Cap: £2.93B
• Dividend Yield: 1.81%
• Average Volume (3M): 378.55K
• Price to Earnings (P/E): 23.4
• Beta (1Y): 0.69
• Revenue Growth: 10.75%
• EPS Growth: 10.61%
• Country: UK
• Employees: 2,509
• Sector: Technology
• Sector Strength: 40
• Industry: Information Technology Services
• EPS (TTM): 0.63
• Shares Outstanding: 199,924,710
• 10 Day Avg. Volume: 344,304
• 30 Day Avg. Volume: 378,553
• PEG Ratio: 2.20
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.42
• Price to Cash Flow (P/CF): 25.60
• P/FCF Ratio: 27.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 1,701.67p
• Price Target Upside: 11.88% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

Softcat's robust financial health, strategic growth initiatives, and positive corporate events contribute to a strong overall evaluation. While the technical indicators suggest stability without strong momentum, the company's valuation reflects high growth expectations already priced in. Overall, Softcat is well-positioned for future performance, with its financial strength and strategic developments bolstering its market stance.

Positive Factors

Earnings

H1 EPS was 6% above expectations, reflecting a stronger performance than anticipated.

Financial Performance

Softcat delivered 1H25 gross profit growth of 12%.

Negative Factors

Growth Forecast

FY25 growth guidance is probably 1% below consensus.

Valuation

Softcat is trading at a higher valuation compared to both its peer group and the broader European IT Services sector, suggesting a premium perception in the market.

Softcat Business Overview & Revenue Model

Company Description

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 software licensing, workplace technology, networking, security, and cloud and datacenter for businesses and public sector organizations. It also offers asset management, collaboration, connectivity, and device services. In addition, the company provides supply chain operations and virtual desktop and applications. Further, it offers lifecycle, modern management, and financial solutions. The company was incorporated in 1987 and is headquartered in Marlow, the United Kingdom.

How the Company Makes Money

Softcat makes money primarily through the sale of IT products and services, which include software, hardware, and managed services. Revenue is generated through direct sales to businesses and organizations that require IT infrastructure and support. Key revenue streams include the resale of software licenses from major vendors, procurement of hardware such as servers and networking equipment, and the provision of consulting and managed IT services. Softcat also benefits from strategic partnerships with leading technology companies, which enable them to offer a wide range of products and solutions. The company earns a margin on the products it resells and charges fees for its consulting and managed services, contributing significantly to its overall earnings.

Softcat Financial Statement Overview

Summary

Softcat's financial performance is commendable, with strong profitability, low leverage, and solid cash flow generation. While revenue growth has faced some fluctuations, the overall financial health remains robust. The company's effective cost management and prudent financial strategies position it well within the software industry.

Income Statement

Softcat demonstrates strong profitability with a consistent increase in gross profit margin from 21.3% to 43.2% over the years, reflecting effective cost management. The net profit margin has also shown stability, averaging around 10-12%. Despite a slight decline in revenue growth recently, the overall trajectory has been positive with revenues recovering from a dip in 2021. EBIT and EBITDA margins are robust, indicating healthy operational efficiency.

Balance Sheet

The company's balance sheet is strong, with a low debt-to-equity ratio, consistently below 0.05, signifying low leverage and financial risk. Return on equity has improved significantly, showing effective utilization of shareholders' funds. The equity ratio has remained stable at around 38-40%, indicating a healthy proportion of equity financing.

Cash Flow

Softcat's cash flow performance is solid, with a notable increase in free cash flow over the years, indicating improved cash generation capability. The operating cash flow to net income ratio is generally above 1, showing strong cash conversion. However, fluctuations in investing and financing cash flows suggest a need for careful management in capital allocation.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
1.04B	962.63M	985.30M	1.08B	784.05M	1.08B
	Gross Profit
440.60M	417.75M	372.31M	326.65M	276.06M	235.47M
	EBIT
161.00M	154.06M	139.85M	139.08M	119.35M	95.32M
	EBITDA
169.95M	166.47M	145.96M	143.61M	124.24M	98.90M
	Net Income Common Stockholders
125.38M	119.04M	112.03M	110.41M	96.19M	75.66M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
141.04M	158.45M	122.62M	97.32M	101.72M	80.14M
	Total Assets
831.88M	780.75M	647.72M	672.06M	497.36M	430.95M
	Total Debt
28.34M	10.36M	9.76M	6.67M	8.30M	9.84M
	Net Debt
-112.71M	-148.10M	-112.86M	-90.65M	-93.42M	-70.30M
	Total Liabilities
550.97M	482.71M	396.28M	460.96M	318.21M	290.20M
	Stockholders Equity
280.91M	298.04M	251.44M	211.10M	179.14M	140.75M
Cash Flow		Free Cash Flow
128.54M	120.27M	102.79M	78.89M	85.01M	55.67M
	Operating Cash Flow
133.96M	121.39M	106.04M	84.11M	91.48M	64.63M
	Investing Cash Flow
-8.55M	-1.35M	-3.25M	-5.22M	-6.46M	-8.96M
	Financing Cash Flow
-96.85M	-78.42M	-77.28M	-86.86M	-63.43M	-54.80M

Softcat Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1521.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SCT, the sentiment is Negative. The current price of 1521 is below the 20-day moving average (MA) of 1584.56, below the 50-day MA of 1572.86, and below the 200-day MA of 1549.84, indicating a bearish trend. The MACD of 18.23 indicates Negative momentum. The RSI at 52.84 is Neutral, neither overbought nor oversold. The STOCH value of 17.43 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:SCT.

Softcat Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SCT	78 Outperform	£2.93B	23.38	47.63%	1.81%	10.75%	10.61%
RMV	77 Outperform	£5.18B	27.36	256.58%	1.38%	7.02%	-0.37%
CCC	76 Outperform	£2.27B	14.00	19.50%	3.27%	0.61%	-9.17%
FDM	66 Neutral	£245.10M	11.95	28.48%	12.92%	-22.84%	-49.60%
Sector *	57 Neutral	$20.24B	9.51	-13.28%	2.72%	5.43%	-24.54%
XPP	56 Neutral	£198.45M	―	-6.40%	―	-21.84%	10.78%
SYN	38 Underperform	£2.96M	0.48	56.96%	―	-55.66%	―

Softcat Corporate Events

Softcat Executives Invest in Company Shares, Signaling Confidence

Softcat plc announced transactions involving its CEO, Graham Charlton, and CFO, Katy Mecklenburgh, who purchased partnership shares under the company’s Share Incentive Plan. These transactions, conducted on the London Stock Exchange, reflect the executives’ commitment to the company’s growth and align their interests with shareholders, potentially impacting Softcat’s market perception positively.

Spark’s Take on GB:SCT Stock

According to Spark, TipRanks’ AI Analyst, GB:SCT is a Outperform.

Softcat demonstrates robust financial health and strategic growth through effective cost management, low leverage, and strong cash flow. Positive corporate events and executive confidence bolster its market position. While technical indicators suggest stability, the stock’s valuation indicates expectations of growth are already priced in. Overall, Softcat is well-positioned for future performance, with a score reflecting its financial strength and positive strategic developments.

To see Spark’s full report on GB:SCT stock, click here.

Softcat Acquires Oakland Group to Boost Data and AI Capabilities

Softcat has acquired Oakland Group Services Ltd, a data and AI consultancy, to enhance its capabilities in data strategy, governance, architecture, engineering, analytics, and AI. This acquisition strengthens Softcat’s market position by expanding its service offerings to meet the growing demand for data expertise in both corporate and public sectors, and aligns with Softcat’s strategic focus on innovation and automation.

Softcat Announces Total Voting Rights for March 2025

Softcat plc announced its total voting rights as of March 31, 2025, revealing a share capital consisting of 199,924,707 ordinary shares with voting rights. This disclosure is in line with the FCA’s Disclosure Guidance and Transparency Rules, allowing shareholders to calculate their interests in the company accurately.

Softcat Reports Strong First Half 2025 Results, Upgrades Profit Guidance

Softcat plc reported strong financial performance for the first half of 2025, with double-digit growth in gross profit and gross invoiced income. The company upgraded its full-year operating profit guidance, reflecting successful strategic execution and a robust second-half pipeline. Despite challenging trading conditions, Softcat’s growth model and investment in AI and automation position it well for future expansion, with potential for acquisitions to further enhance its offerings.

Capital Group Reduces Stake in Softcat PLC

The Capital Group Companies, Inc. has reduced its voting rights in Softcat PLC from 5.4% to 4.97%, as reported on March 12, 2025. This change in holdings may impact the company’s shareholder dynamics, reflecting a shift in investment strategy by a major institutional investor, which could influence market perceptions and stakeholder interests.

Softcat Executives Invest in Company Shares, Signaling Confidence

Softcat plc announced transactions involving its CEO, Graham Charlton, and CFO, Katy Mecklenburgh, who both purchased partnership shares under the company’s Share Incentive Plan. These transactions, conducted on the London Stock Exchange, reflect the executives’ commitment to the company’s growth and align their interests with shareholders, potentially enhancing stakeholder confidence.

Softcat Announces Total Voting Rights Update

Softcat plc announced its total voting rights, revealing that as of 28 February 2025, the company has 199,916,436 ordinary shares in issue, each with voting rights. This disclosure is in accordance with the FCA’s Disclosure Guidance and Transparency Rules, providing shareholders with the necessary information to assess their interests in the company.

Softcat to Announce Half-Year Results and Host Investor Briefing

Softcat plc announced it will release its financial results for the six months ending 31 January 2025 on 19 March 2025, accompanied by a virtual briefing for investors and analysts. This announcement underscores Softcat’s commitment to transparency and engagement with stakeholders, potentially impacting its market positioning and investor relations.

Softcat Executives Purchase Shares Under Incentive Plan

Softcat plc announced transactions involving its CEO, Graham Charlton, and CFO, Katy Mecklenburgh, under the company’s Share Incentive Plan. Both executives purchased Ordinary Shares on the London Stock Exchange, marking a commitment to the company’s growth and aligning their interests with shareholder value. This move is indicative of strong internal confidence and may positively impact investor perceptions.

Softcat PLC Updates on Total Voting Rights and Share Capital

Softcat PLC announced that as of January 31, 2025, its share capital consisted of 199,914,289 ordinary shares with voting rights, emphasizing its compliance with the FCA’s Disclosure Guidance and Transparency Rules. This disclosure aids shareholders in determining their interests and any necessary notifications regarding changes in their stakes.

Softcat Director Purchases Shares, Signaling Confidence

Softcat plc announced a purchase of Ordinary Shares by Jacqui Ferguson, a Non-Executive Director, under the Market Abuse Regulation. This transaction, involving 3,038 shares at £14.70 each, was conducted on the London Stock Exchange, reflecting managerial confidence in the company’s market positioning and future prospects.

Softcat PLC Announces Major Shareholder Notification

Softcat PLC has announced a major shareholder notification concerning GIC Private Limited, which is based in Singapore. The notification, dated January 16, 2025, reveals that GIC Private Limited’s voting rights in Softcat PLC have fallen below 3% from a previous position of above 3.8%. This change in voting rights was prompted by an acquisition or disposal of shares. The decrease in voting rights may impact Softcat’s shareholder structure and could influence future decision-making processes at the company.

Softcat CEO Exercises Share Options, Retains Stake

Softcat plc announced the exercise of nil-cost options by its CEO, Graham Charlton, under the company’s Long Term Incentive Plan and Annual and Deferred Bonus Plan. These options, awarded in November 2021, have vested and resulted in the sale of a portion of shares to cover tax liabilities, with the remaining shares retained by the CEO. This transaction underscores Softcat’s ongoing commitment to aligning management incentives with shareholder interests and maintaining transparency in managerial share dealings.