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Softcat
(LSE:SCT)
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Rating:68Neutral
Price Target:
1,850.00 p
▼(-11.14% Downside)
Action:Downgraded
Date:10/16/26
The score is driven primarily by strong financial quality (low leverage, high ROE, solid cash conversion) and a constructive earnings outlook from management. These positives are tempered by clearly weak technical signals (price below key moving averages and negative MACD) and profitability headwinds highlighted in the results (margin pressure and elevated non-underlying/integration costs).
Positive Factors
Broad-based growth
Strong growth across revenue, gross profit and multiple technology categories indicates broad customer demand rather than reliance on one product line. This diversified expansion can reinforce Softcat’s scale, vendor relevance and ability to fund continued investment over the next several quarters.
Negative Factors
Structural margin pressure
The lower gross profit rate shows that strong volume growth is not translating fully into margin expansion. Mix toward lower-margin products, large solutions projects and Microsoft-related changes could continue to constrain profitability unless higher-value services and vendor economics offset the pressure.
Read all positive and negative factors
Positive Factors
Negative Factors
Broad-based growth
Strong growth across revenue, gross profit and multiple technology categories indicates broad customer demand rather than reliance on one product line. This diversified expansion can reinforce Softcat’s scale, vendor relevance and ability to fund continued investment over the next several quarters.
Read all positive factors
Softcat (SCT) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£3.70B
Dividend Yield2.7%
Average Volume (3M)840.91K
Price to Earnings (P/E)22.6
Beta (1Y)0.38
Revenue Growth35.43%
EPS Growth13.78%
CountryUK
Employees2,925
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.76
Shares Outstanding215,655,000
10 Day Avg. Volume938,190
30 Day Avg. Volume840,912
Financial Highlights & Ratios
PEG Ratio1.89
Price to Book (P/B)10.51
Price to Sales (P/S)1.94
P/FCF Ratio23.92
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£2,138.00Price Target Upside2.69% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)0.87
Revenue Forecast (FY)£2.23B
Softcat Business Overview & Revenue Model
Company Description
Softcat plc, a UK-based company established in 1987 with headquarters in Marlow, operates as a leading value-added IT reseller and provider of IT infrastructure solutions. Serving both commercial enterprises and public sector entities across the U...
How the Company Makes Money
Softcat makes money primarily by reselling third-party technology and providing associated services. A large portion of revenue comes from the sale of software licences and subscriptions (including cloud-related offerings), where Softcat earns a m...
Softcat Earnings Call Summary
Earnings Call Date:Oct 14, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Mar 24, 2027
Earnings Call Sentiment Positive
The call was strongly positive, characterized by exceptional FY2026 growth, broad-based customer and portfolio performance, strong cash generation, employee engagement gains, continued investment, and confidence in the AI, international, and GDT opportunities. The main negatives were lower gross profit margins, operating costs growing faster than gross profit, elevated one-off and acquisition-related costs, tougher FY2027 comparisons, ongoing memory constraints and customer spending scrutiny, and temporarily higher leverage. Highlights significantly outweighed the lowlights.Positive Updates
Exceptional FY2026 Growth and Profitability
Gross profit grew 24.7% to GBP 616.3 million, underlying operating profit increased 19.4% to GBP 215.1 million, and underlying basic earnings per share rose 19.7% to GBP 0.832. Management said growth was ahead of expectations at the start of the year.
Negative Updates
Gross Profit Margin Rate Decline
Overall gross profit as a percentage of gross invoiced income declined by 60 basis points year-on-year, reflecting a mix shift into lower-margin products, the impact of Microsoft EA changes, and the diluted impact of large solutions projects at lower margin.
Read all updates
Q4-2026 Updates
Positive
Negative
Exceptional FY2026 Growth and Profitability
Gross profit grew 24.7% to GBP 616.3 million, underlying operating profit increased 19.4% to GBP 215.1 million, and underlying basic earnings per share rose 19.7% to GBP 0.832. Management said growth was ahead of expectations at the start of the year.
Read all positive updates
Company Guidance
For FY 2027, excluding the contribution from GDT, the Board expects “high single-digit underlying operating profit growth,” “slightly ahead of gross profit growth”; GP is expected to be “first half-weighted,” while underlying operating profit is expected to be “more balanced across the year.” Non-underlying costs are expected to increase by “around two to two and a half times,” while absolute costs are expected to go down, with “a marginal increase” after excluding the “low teens” one-off cost in H2 FY 2026; headcount growth is expected to be “1-2 percentage points” higher than the 10.8% average headcount growth in FY 2026. Microsoft’s changes are “factored into our forward guidance” and expected to be “a slight net positive,” and estimated net debt leverage following completion of GDT is forecast to be 1.3x and “expected to be below 1x by July 2028,” against a target of 0.5x-1x.Softcat Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
90
Very Positive
Cash Flow
73
Positive
| Breakdown | Jul 2026 | Jul 2025 | Jul 2024 | Jul 2023 | Jul 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.98B | 1.46B | 962.63M | 985.30M | 1.08B |
| Gross Profit | 611.90M | 490.73M | 417.75M | 372.31M | 326.65M |
| EBITDA | 227.70M | 190.74M | 166.47M | 147.02M | 143.61M |
| Net Income | 150.30M | 133.01M | 119.04M | 112.03M | 110.41M |
Balance Sheet | |||||
| Total Assets | 1.18B | 1.19B | 780.75M | 647.72M | 672.06M |
| Cash, Cash Equivalents and Short-Term Investments | 199.90M | 182.28M | 158.45M | 122.62M | 97.32M |
| Total Debt | 37.90M | 35.19M | 10.36M | 9.76M | 6.67M |
| Total Liabilities | 816.50M | 853.14M | 482.71M | 396.28M | 460.96M |
| Stockholders Equity | 364.00M | 338.78M | 298.04M | 251.44M | 211.10M |
Cash Flow | |||||
| Free Cash Flow | 160.00M | 136.28M | 120.27M | 102.79M | 78.89M |
| Operating Cash Flow | 166.00M | 148.06M | 115.61M | 106.04M | 84.11M |
| Investing Cash Flow | -6.60M | -23.37M | -1.35M | -3.25M | -5.22M |
| Financing Cash Flow | -142.30M | -98.15M | -78.42M | -77.28M | -86.86M |
Softcat Technical Analysis
Neutral
2082.00
Price Trends
1881.90
Negative
1886.27
Negative
1605.21
Positive
Market Momentum
-54.26
Positive
43.18
Neutral
45.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SCT, the sentiment is Neutral. The current price of 2082 is above the 20-day moving average (MA) of 1777.80, above the 50-day MA of 1881.90, and above the 200-day MA of 1605.21, indicating a neutral trend. The MACD of -54.26 indicates Positive momentum. The RSI at 43.18 is Neutral, neither overbought nor oversold. The STOCH value of 45.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:SCT.
Softcat Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | £5.52B | 27.14 | 21.78% | 1.48% | 53.51% | 28.32% | |
73 Outperform | £67.17M | 38.77 | 35.58% | 2.34% | 15.70% | -4.34% | |
73 Outperform | £79.87M | 22.96 | 20.21% | ― | 26.81% | 150.54% | |
70 Neutral | £87.84M | 2.11 | 20.35% | 0.15% | -2.33% | 244.80% | |
68 Neutral | £3.70B | 22.63 | 46.24% | 2.70% | 35.43% | 13.78% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | £115.22M | 46.05 | 4.84% | 6.67% | -25.95% | -83.91% |
* Technology Sector Average
GB:SCT
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Softcat Corporate Events
Private Placements and FinancingRegulatory Filings and Compliance
Softcat Adds New Ordinary Shares to LSE Main Market
Neutral
Oct 16, 2026
Softcat plc has admitted a further 12,432 ordinary shares of £0.0005 each to trading on the London Stock Exchange Main Market, following a recent further issue of equity. The new shares are fully fungible with the existing stock, bringing the...
Private Placements and FinancingRegulatory Filings and Compliance
Softcat Directors Subscribe to New Equity, Lifting Share Count to 215.7 Million
Neutral
Oct 15, 2026
Softcat plc has confirmed that all its directors have agreed to subscribe for 12,432 new ordinary shares, representing a modest further issue of equity to management. The new shares are expected to be admitted to trading on or around 16 October 20...
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresM&A Transactions
Softcat posts double-digit profit growth and moves into U.S. market with GDT deal
Positive
Oct 14, 2026
Softcat reported another year of exceptional growth for the 12 months to 31 July 2026, with gross invoiced income up 30.5% to £4.72bn and revenue rising 35.4% to £1.98bn. Gross profit increased 24.7% to £616.3m and underlying operat...
Regulatory Filings and Compliance
Softcat Executives Add Shares Through Incentive Plan
Positive
Oct 9, 2026
Softcat plc has disclosed small share purchases by its chief executive Graham Charlton and chief financial officer Katy Mecklenburgh under the company’s Share Incentive Plan. Each bought a single-digit number of ordinary shares at 1,832p on ...
Business Operations and StrategyRegulatory Filings and Compliance
Softcat Confirms Total Voting Rights and Share Capital Structure
Neutral
Oct 1, 2026
Softcat plc has reported that, as of 30 September 2026, its issued share capital comprises 215,642,562 ordinary shares of £0.0005 each, all of which carry voting rights and none of which are held in treasury. This disclosure clarifies the tot...
Business Operations and StrategyDelistings and Listing ChangesPrivate Placements and FinancingRegulatory Filings and Compliance
Softcat Expands Share Capital With New LSE Admission
Neutral
Sep 22, 2026
Softcat plc has increased its share capital with the admission to trading of 18,730,158 new ordinary shares of £0.0005 each on the London Stock Exchange’s Main Market. Following this move, which is fully fungible with its existing stock...
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
Softcat Raises £354m in Equity to Part-Fund GDT Acquisition
Positive
Sep 18, 2026
Softcat has raised approximately £354 million through a non-pre-emptive equity issue of 18.7 million new ordinary shares, representing about 9.5% of its existing share capital, to help finance the acquisition of GDT Topco, L.P. The placing, e...
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
Softcat Launches £350m Equity Raise to Fund US Acquisition of General Datatech
Positive
Sep 17, 2026
Softcat plc plans to raise about £350 million through a non-pre-emptive equity issue comprising an institutional placing, a UK retail offer and subsequent director subscriptions, to part-fund its agreed $1.05 billion acquisition of U.S.-based...
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
Softcat launches UK retail share offer to help fund GDT acquisition
Positive
Sep 17, 2026
Softcat has launched a conditional retail offer of new ordinary shares in the UK via RetailBook, alongside a separate accelerated placing to institutional investors. The offer, open to existing and new UK shareholders through brokers and investmen...
Business Operations and StrategyFinancial DisclosuresM&A TransactionsPrivate Placements and Financing
Softcat to Acquire US IT Firm GDT in $1.05bn Deal as Profits Surge
Positive
Sep 17, 2026
Softcat has agreed to acquire US IT solutions provider GDT Topco, L.P. for an enterprise value of $1.05bn, in a deal that significantly expands its US presence and global fulfilment capabilities. The acquisition adds meaningful scale, an establish...
Business Operations and Strategy
Softcat Adds 20,911 Shares Under Long-Term Incentive Plan
Neutral
Sep 10, 2026
Softcat plc has issued and allotted 20,911 new ordinary shares between 1 August and 31 August 2026 under its Long Term Incentive Plan, reflecting ongoing use of equity-based compensation for employees and executives. The new shares were covered by...
Regulatory Filings and Compliance
Softcat Confirms Share Capital and Total Voting Rights
Neutral
Sep 10, 2026
Softcat plc has confirmed its total voting rights and share capital position as at 31 August 2026, in line with U.K. Disclosure and Transparency Rules. The company reported 196,912,404 ordinary shares in issue, all carrying voting rights, and stat...
Regulatory Filings and Compliance
Softcat Executives Add Shares Under Incentive Plan
Positive
Sep 9, 2026
Softcat plc has disclosed share purchases by its chief executive officer Graham Charlton and chief financial officer Katy Mecklenburgh under the company’s Share Incentive Plan. Both executives acquired seven ordinary shares each at a price o...
Executive/Board ChangesRegulatory Filings and Compliance
Softcat CEO and CFO Receive Share Incentive Awards
Neutral
Sep 8, 2026
Softcat plc has disclosed share transactions involving its senior leadership under UK Market Abuse Regulation requirements. The company reported that chief executive Graham Charlton and chief financial officer Katy Mecklenburgh each received an al...
Regulatory Filings and Compliance
Softcat Executives Report Share Purchases Under Incentive Plan
Neutral
Aug 11, 2026
Softcat plc has disclosed share purchases by senior management under its share incentive arrangements, in line with UK market abuse regulations. The company provided details of the transactions involving ordinary shares listed on the London Stock ...
Business Operations and Strategy
Softcat Adds Peel Hunt as Joint Corporate Broker to Bolster Market Reach
Positive
Aug 10, 2026
Softcat has appointed Peel Hunt LLP as a joint corporate broker with immediate effect, adding to its existing relationship with J.P. Morgan Cazenove. The move strengthens the company’s capital markets advisory support, signalling an effort t...
Business Operations and StrategyPrivate Placements and FinancingRegulatory Filings and Compliance
Softcat Adds 4,284 Shares Under Long-Term Incentive Plan
Neutral
Aug 3, 2026
Softcat plc has issued and allotted 4,284 new ordinary shares of 0.0005 pence each between 1 July and 31 July 2026 under its Long Term Incentive Plan, aligning equity-based rewards with its employee compensation strategy. These shares, which form ...
Regulatory Filings and Compliance
Softcat Confirms Total Voting Rights and Share Capital Structure
Neutral
Aug 3, 2026
Softcat plc reported that, as of 31 July 2026, its issued share capital comprises 196,891,493 ordinary shares of £0.0005 each, all carrying voting rights and with no shares held in treasury. This disclosure clarifies the company’s total...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.