Softchoice Corporation (SFTC.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

Softchoice Corporation designs, procures, implements, and manages information technology (IT) environment solutions in the United States and Canada.The company offers cloud and data center solutions, such as data center and application modernization, as well as cloud migration, adoption, and management; collaboration and digital workplace solutions comprising secure access, and adoption and change management; IT asset management solutions, including software and hardware asset management solutions; network transformation solutions; and IT security support solutions.It also provides cloud migration, workload assessment, managed, and cost assessment services.

Softchoice Corporation was incorporated in 1989 and is headquartered in Toronto, Canada.

Show Full description

1.b. Last Insights on SFTC

Softchoice Corporation's recent performance was driven by several positive factors. The company's Q3 2024 revenue beat expectations, increasing by 3.9% year-over-year to $189.2 million. Additionally, Softchoice was named Cisco Canada's Commercial Impact Partner of the Year at Cisco Partner Summit 2024, highlighting its strong partnership with the technology giant. Furthermore, the company received a score of 100 on the Human Rights Campaign Foundation's 2025 Corporate Equality Index, demonstrating its commitment to diversity and inclusion. Most recently, Softchoice announced a definitive agreement to be acquired by World Wide Technology at a price of C$24.50 per share, providing a clear path forward for the company.

1.c. Company Highlights

Last Price	24.49
Change Percentage	0.04%
Open	24.49
Previous Close	24.48
Market Cap ( Millions)	1478
Volume	21629
Year High	24.57
Year Low	16.09
M A 50	24.36
M A 200	20.86

FCF Yield	4.12%
Dividend Yield	0.53%
ROE	-18.78%
Debt / Equity	-193.02%
Net Debt / EBIDTA	458.54%
Price To Book	-9.64
Price Earnings Ratio	50.82
Price To FCF	24.28
Price To sales	2.8
EV / EBITDA	27.97

2. Transcript Summary

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3. NewsRoom

World Wide Technology Announces Completion of Softchoice Acquisition, Expanding Software, Cloud, Cybersecurity and AI Capabilities

Mar -13

Source:

World Wide Technology Completes Acquisition of Softchoice Corporation

Mar -13

Source:

Court Grants Final Order to Softchoice Corporation Approving Arrangement with World Wide Technology

Mar -06

Source:

Softchoice Corporation Shareholders Approve Arrangement with World Wide Technology

Mar -04

Source:

Softchoice Commits $900,000 of In-kind Technology Support for TakingITGlobal

Feb -27

Source:

Leading Independent Proxy Advisory Firms Recommend Softchoice Corporation Shareholders Vote FOR the Proposed Arrangement with World Wide Technology

Feb -20

Source:

Softchoice Corporation Announces Filing of Circular and Receipt of Interim Order in Relation to Proposed Plan of Arrangement with World Wide Technology

Feb -10

Source:

Exploring High Growth Tech And 2 Other Promising Stocks

Jan -27

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.93%)

6. Segments

Hardware

Expected Growth: 9.27%

Softchoice Corporation's 9.27% growth in Hardware segment is driven by increasing demand for cloud-based infrastructure, digital transformation, and cybersecurity solutions. Additionally, the company's strategic partnerships with leading OEMs, expansion into new markets, and investments in emerging technologies such as AI and IoT have contributed to this growth.

Software and Cloud

Expected Growth: 25.46%

Softchoice Corporation's Software and Cloud segment growth of 25.46% is driven by increasing demand for digital transformation, cloud adoption, and cybersecurity solutions. Additionally, the company's strategic partnerships with leading vendors, such as Microsoft and Amazon Web Services, have expanded its offerings and enhanced its competitive position.

Services

Expected Growth: 9.27%

Softchoice Corporation's 9.27% growth is driven by increasing demand for cloud-based services, strategic partnerships, and expansion into new markets. The company's expertise in IT consulting, cybersecurity, and digital transformation also contributes to its growth. Additionally, the rising need for businesses to adopt digital solutions to stay competitive and improve operational efficiency further fuels Softchoice's growth.

7. Detailed Products

Cloud Services

Softchoice's cloud services provide a comprehensive suite of solutions to help organizations migrate, manage, and optimize their cloud infrastructure.

Cyber Security Solutions

Softchoice's cyber security solutions provide advanced threat protection, detection, and response to help organizations protect their data and systems from cyber threats.

Data Center Solutions

Softchoice's data center solutions provide a range of services to help organizations design, build, and manage their data center infrastructure.

Digital Workplace Solutions

Softchoice's digital workplace solutions provide a range of services to help organizations create a modern, collaborative, and productive work environment.

IT Consulting Services

Softchoice's IT consulting services provide expert guidance and support to help organizations optimize their IT infrastructure and operations.

Managed Services

Softchoice's managed services provide ongoing monitoring, maintenance, and support to help organizations manage their IT infrastructure.

Software Licensing

Softchoice's software licensing services provide a range of software solutions to help organizations optimize their software investments.

8. Softchoice Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Softchoice Corporation operates in the IT industry, where substitutes are readily available. However, the company's strong brand reputation and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

Softchoice Corporation's customers have significant bargaining power due to the availability of alternative suppliers and the company's dependence on a few large customers.

Bargaining Power Of Suppliers

Softchoice Corporation has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's strong relationships with suppliers also mitigate the risk of supply chain disruptions.

Threat Of New Entrants

The threat of new entrants in the IT industry is moderate, as it requires significant investment in technology and infrastructure. However, Softchoice Corporation's established brand and customer relationships provide a barrier to entry for new competitors.

Intensity Of Rivalry

The IT industry is highly competitive, with many established players competing for market share. Softchoice Corporation faces intense rivalry from competitors, which can lead to pricing pressure and reduced profit margins.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	47.83%
Debt Cost	3.95%
Equity Weight	52.17%
Equity Cost	3.14%
WACC	3.52%
Leverage	91.70%

11. Quality Control: Softchoice Corporation passed 7 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

TaskUs

A-Score: 5.3/10

Value: 5.1

Growth: 8.2

Quality: 5.5

Yield: 0.0

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

Hackett

A-Score: 5.1/10

Value: 4.1

Growth: 5.1

Quality: 6.7

Yield: 5.0

Momentum: 1.5

Volatility: 8.0

1-Year Total Return ->

Softchoice

A-Score: 4.7/10

Value: 3.2

Growth: 5.3

Quality: 5.2

Yield: 5.0

Momentum: 4.0

Volatility: 5.3

1-Year Total Return ->

Xerox

A-Score: 4.7/10

Value: 9.8

Growth: 2.3

Quality: 3.0

Yield: 10.0

Momentum: 0.5

Volatility: 2.3

1-Year Total Return ->

Converge Technology Solutions

A-Score: 4.4/10

Value: 8.4

Growth: 4.7

Quality: 3.8

Yield: 0.0

Momentum: 7.5

Volatility: 2.0

1-Year Total Return ->

CSP

A-Score: 3.6/10

Value: 7.6

Growth: 2.8

Quality: 4.2

Yield: 1.0

Momentum: 4.0

Volatility: 2.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-7.37%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

3.52%

Softchoice Corporation - CA83405M1086

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SFTC

1.c. Company Highlights

Higher Yield

Better Quality

Fairly Valued

Earnings Miss

Revenues Miss

Earnings Beats

Average Growth

Revenues Beats

Stable Momentum

Average Quality

Medium Volatility

Less Volatile

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.93%)

6. Segments

Hardware

Expected Growth: 9.27%

Software and Cloud

Expected Growth: 25.46%

Services

Expected Growth: 9.27%

7. Detailed Products

Cloud Services

Cyber Security Solutions

Data Center Solutions

Digital Workplace Solutions

IT Consulting Services

Managed Services

Software Licensing

8. Softchoice Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Softchoice Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

24.49$

Current Price

24.49$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA