As the stock price jump clearly shows, investors very much like what Softcat (LON:SCT) is saying about growth opportunities ahead.
The Wycombe-based IT infrastructure reseller upgraded FY26 underlying operating profit guidance to mid-teens growth, from high single-digit growth, after strong Q3 trading. That growth is broad-based is great, although strongest in corporate, supported by AI-enabled infrastructure demand. Howvere, there is evidence of some customer order pull-forward due to memory shortages. This last point needs watching.
| Softcat (LON:SCT) | Price: £15.98 (+11%) | Market cap: £3.50bn |
🧩 Key trends at a glance
| Area | Evidence | Takeaway |
| Q3 momentum | Strong double-digit YoY growth in gross profit and underlying operating profit | Trading remains ahead of plan |
| Demand drivers | AI infrastructure, datacentre-to-edge, security, data/automation | Structural demand tailwinds |
| Customer base | 10,000+ customers cited by CEO | Scale and cross-sell remain core strengths |
| Risk | Memory shortages and macro uncertainty | Some demand may be pulled forward |
| FY26 outlook | Underlying operating profit now expected to grow mid-teens | Second guidance upgrade this year |
📊 Recent financial context
| Metric | FY25 | H1 FY26 | Comment |
| Gross invoiced income | £3.62bn, +26.8% | £2.01bn, +33.3% | Larger solutions projects lifting billings |
| Gross profit | £494.3m, +18.3% | £269.9m, +22.6% | Core income growth accelerating |
| Underlying operating profit | £180.1m, +16.9% | £93.8m, +27.3% | Strong operating leverage |
| Net cash | £182.3m FY25 | £206.0m H1 FY26 | Balance sheet remains strong |
| Dividend | 29.3p ordinary FY25 | 9.9p interim FY26 | Progressive payout continues |
Sources: FY25 preliminary results and H1 FY26 report.
Softcat surges after H1 beat powers guidance upgrades
📈 Stock valuation snapshot
| Metric | Latest available |
| Share price | £15.98, +11% intraday |
| Market cap | ~£3.50bn |
| P/E TTM | ~20.2x–20.6x |
| Forward P/E (ahead of Q3 22 May ’26) | ~18.8x |
| EV/EBITDA | ~12.7x |
| Dividend yield | ~3.5% (Stockopedia forecast) |
| Net cash | ~£169m |
The valuation is still premium, but less stretched than past peaks. YTD performance is now +16%, after today’s reaction, but there’s work to be done considering:
- Stock still ~16% off 12m peaks
- ~30% below Sep’21 £22.04 all-time highs
- 6m/12m momentum has been poor
That said, the premium is supported by cash generation, market-share gains and consistent profit growth; the main risk is whether AI/memory-driven hardware demand proves temporary.
🧠 Conclusion
Q3 confirms an improving earnings trajectory and another guidance upgrade. The stock’s rally on 22 May looks justified by better profit visibility, but valuation already prices in quality. Upside depends on sustained AI infrastructure demand and continued market-share gains. Downside risk is demand normalisation after order pull-forward.
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