Softcat (LON:SCT) Releases Quarterly Earnings Results

Softcat (LON:SCT) announced its quarterly earnings results on Wednesday. The company reported GBX 75.80 earnings per share (EPS) for the quarter, Digital Look Earnings reports. Softcat had a net margin of 7.61% and a return on equity of 46.24%.

Here are the key takeaways from Softcat’s conference call:

• Softcat reported an exceptional FY 2026, with gross profit up 24.7% to £616.3 million and underlying operating profit up 19.4% to £215.1 million. Customer growth accelerated to more than 10,500, while gross profit per customer increased 20.6%.
• Underlying operating costs rose 27.7%, faster than gross profit, reducing the operating-profit-to-gross-profit ratio to 34.9% from 36.4%. Profitability was also affected by lower-margin product mix, Microsoft licensing changes, large lower-margin projects and one-off employee, advisory and incentive costs.
• For FY 2027, management expects high-single-digit underlying operating profit growth excluding GDT, with gross profit growth modestly moderated by tougher comparisons, the absence of unusually large projects and prior-year memory-related order pull-forward. Non-underlying costs are expected to rise roughly two to two-and-a-half times because of GDT acquisition and integration expenses.
• Management sees substantial long-term demand from AI-driven infrastructure investment, including data centers, networking, security, cloud and services. The GDT acquisition is expected to add U.S. and Americas fulfillment, infrastructure expertise and global cross-selling opportunities, although estimated post-deal leverage will initially rise to 1.3x net debt to EBITDA.

Softcat Trading Up 2.2%

Shares of SCT opened at GBX 1,734.35 on Friday. The stock has a fifty day moving average of GBX 1,935.22 and a two-hundred day moving average of GBX 1,742.66. The company has a debt-to-equity ratio of 10.41, a quick ratio of 1.38 and a current ratio of 1.39. The company has a market capitalization of £3.73 billion, a PE ratio of 24.74, a price-to-earnings-growth ratio of 11.51 and a beta of 0.58. Softcat has a fifty-two week low of GBX 1,083 and a fifty-two week high of GBX 2,134.

Insiders Place Their Bets

In other Softcat news, insider Kathryn Mecklenburgh acquired 176 shares of the firm’s stock in a transaction dated Monday, September 7th. The shares were acquired at an average price of GBX 2,045 per share, for a total transaction of £3,599.20. Also, insider Graham Charlton acquired 176 shares of the stock in a transaction dated Monday, September 7th. The stock was acquired at an average cost of GBX 2,045 per share, with a total value of £3,599.20. In the last three months, insiders have acquired 384 shares of company stock worth $749,739. Corporate insiders own 2.91% of the company’s stock.

Key Stories Impacting Softcat

Here are the key news stories impacting Softcat this week:

• Positive Sentiment: Softcat reported a strong fiscal 2026, with revenue rising 35.4% and profit increasing 19.4%. The company also raised its dividend, supporting the investment case and indicating confidence in cash generation. Softcat FY2026 profits rise 19.4% as revenue grows 35.4%
• Positive Sentiment: The company is expanding in the United States through its deal with GDT, potentially broadening its addressable market and creating an additional long-term growth opportunity. Softcat posts double-digit profit growth and moves into U.S. market with GDT deal
• Positive Sentiment: Directors agreed to subscribe for 12,432 new ordinary shares. Although the issue is small, insider participation can signal management alignment with shareholders. Softcat Directors Subscribe to New Equity
• Neutral Sentiment: Jefferies reaffirmed its “hold” rating and set a GBX 1,700 target, suggesting limited near-term upside at the prevailing valuation.
• Positive Sentiment: One stock analysis estimates approximately 25% potential upside, based on Softcat’s position in the IT-reseller sector and its growth prospects. Softcat Stock Analysis and Potential Upside
• Negative Sentiment: Management’s fiscal 2027 guidance implies a deceleration from the exceptionally strong fiscal 2026 performance. That slower-growth outlook overshadowed the earnings beat and dividend increase, driving the negative share-price reaction. Softcat shares fall as outlook points to slower growth
• Negative Sentiment: The new share issuance increases the share count to approximately 215.7 million, creating modest dilution for existing investors, although the number of shares issued is small.

Analysts Set New Price Targets

A number of research analysts have recently weighed in on the stock. Berenberg Bank reissued a “buy” rating and set a GBX 2,400 price objective on shares of Softcat in a research note on Friday. Jefferies Financial Group restated a “hold” rating and set a GBX 1,700 price objective on shares of Softcat in a research report on Wednesday. Deutsche Bank Aktiengesellschaft lowered Softcat to a “hold” rating and upped their target price for the company from GBX 1,800 to GBX 2,140 in a research note on Wednesday, August 26th. Finally, JPMorgan Chase & Co. upped their target price on Softcat from GBX 1,950 to GBX 2,300 and gave the company an “overweight” rating in a research note on Monday, September 7th. Four analysts have rated the stock with a Buy rating, three have assigned a Hold rating and one has given a Sell rating to the company’s stock. Based on data from MarketBeat.com, Softcat has a consensus rating of “Hold” and a consensus price target of GBX 1,993.75.

Softcat Company Profile

Softcat plc operates 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 public cloud, collaboration, connectivity, data centre and private cloud, devices, and financial solution services. In addition, the company provides IT asset management, lifecycle solutions, modern management, security, software licensing, supply chain operation, and virtual desktop and application.