COMPUTACENTER PLC (CCC) — Investment Research Note

Executive summary

Computacenter is a UK-headquartered independent technology reseller and IT-services provider that helps large corporate and public-sector clients source, transform and manage their IT infrastructure across the UK, Germany, North America, and Western Europe. Over the five-year period, the group has doubled adjusted PBT (£146m in 2019 → £272m in 2025) and then delivered an inflection in H1 2026 with revenue +71.6%, adjusted operating profit +87.6%, and adjusted diluted EPS +94.1%, driven by an explosion of hyperscale/neocloud AI-infrastructure build-out volume in North America and the UK — supported by a record £9.3bn committed product order backlog (+323% YoY). The single most important valuation point today is that the AI-driven hyperscale growth is real and cash-generative, but is structurally lower-margin than the legacy business (H1 26 gross margin 9.6% vs. 12.6% in H1 25), so the market is being asked to pay for a mix-shifted, faster-growing but lower-quality-margin business.

Fair value estimate

Methodology: Forward P/E on FY26E and FY27E adjusted diluted EPS, cross-checked against implied market cap.

• H1 2026 adj diluted EPS: 101.9p. FY26 guidance ≥ £380m adj PBT, effective tax ~29.5% → ~£268m adj PAT ÷ ~105.4m diluted shares ≈ 255p adj EPS for FY26.
• FY27E: the £9.3bn backlog vs. H1 revenue of £6.85bn implies strong forward visibility; assuming ~15-20% adjusted profit growth off FY26 → adj EPS ~290–310p.
• Multiple: 16–20x forward earnings is appropriate — above legacy CCC range (12–15x historically) reflecting AI-driven momentum, below top-tier IT infrastructure names given lower gross margins and cyclicality.

Fair-value range: 4,900p – 6,000p per share (£5,140m – £6,294m market cap), midpoint ~5,450p / £5,720m.

• Current price 5,300p, current market cap £5,866.6m
• Absolute upside/downside: approximately –2.5% vs. midpoint (i.e., roughly fairly valued)
• Downside to bear case (4,900p): ~-7.5%; upside to bull case (6,000p): ~+13%

The stock has already re-rated aggressively (2,686p Sep-25 → 5,300p Sep-26, +97%), and the FTSE 100 promotion (June 26) has added a passive-flow tailwind. Fair value catches up with the run, but is not obviously cheap. 2026-09-08 H1 2026; 2026-07-09 trading update; market data

Sector context

• ICB Sector confirmed: Technology / Technology Services (value-added reseller & IT infrastructure services).
• Quality/growth/leverage vs. peers: Above sector average on growth momentum (H1 26 revenue +72% is exceptional for a reseller), in line on quality (clean cash conversion historically, though H1 26 saw an £82.6m operating cash outflow due to inventory build), well below sector on leverage (net cash £308.7m adjusted). Gross margin (9.6% H1 26) is below scaled software peers but consistent with distribution-heavy value-added resellers.
• Listed peers: Softcat (SCT.L), Bytes Technology (BYIT.L) in the UK reseller space; CDW (CDW.US), Insight Enterprises (NSIT.US) in the US. CCC's international footprint and Managed Services scale differentiate it from pure resellers.

Investment thesis

• Direct hyperscale/neocloud AI-infrastructure beneficiary with a real revenue line, not just a marketing story. North America H1 26 op profit up 148% in constant currency, driven by "buoyant data center demand, including AI-related infrastructure" for hyperscale, neocloud and enterprise customers; the UK Technology Sourcing revenue more than tripled on "AI-related infrastructure projects" in the Nordics and Eurasia. GAI acquisition brought Nvidia's US Public Sector Partner of the Year 2025 into the group. 2026-09-08 H1 2026; 2026-05-28 GAI acquisition
• Record £9.3bn backlog gives unusual visibility for a reseller. Backlog up 323% YoY and +29.5% since Dec-25 in constant currency, dominated by North America (£6.9bn) but growing in every region. Provides forward comfort on FY26 guidance (£380m+ PBT, ~12% above prior consensus) and support for FY27. 2026-09-08 H1 2026
• Strong balance sheet + long dividend record + disciplined capital allocation. £308.7m adjusted net funds post ~£124m of AgreeYa+GAI acquisitions; £1.35bn returned to shareholders since 2013; 14.8% interim dividend increase to 27.1p; ~19 consecutive years of adjusted EPS growth. Provides downside protection even if AI cycle disappoints. 2026-09-08 H1 2026; 2026-03-12 FY 2025

Key risks

• Gross margin compression is structural, not transitory. Group gross margin fell from 15.1% (FY23) → 12.4% (FY25) → 9.6% (H1 26); "some customers are reprioritising their IT spending" given component price inflation, and hyperscale volume is dilutive to margin. If margins compress further, operating profit growth could decouple from revenue growth on the downside. 2026-09-08 H1 2026
• Customer concentration and cyclicality of hyperscale capex. One US customer accounted for £2,731m of North American revenue in FY25 (28% of group). Hyperscale capex is famously lumpy; a single customer's capex pause or contract shift could materially dent growth. 2026-03-12 FY 2025
• Working capital / cash conversion strain. Inventory jumped from £482.8m (Dec-25) to £1,260.4m (Jun-26) as large orders staged; net cash outflow from operating activities £82.6m in H1 26. Backlog is largely committed and cash-collateralised, but any customer cancellation or delay could turn "risk-free inventory" into a write-down. Non-recourse invoice financing rose from £38.8m to £140.5m. 2026-09-08 H1 2026

Operating leverage

Operating leverage is moderate rather than extreme for a business at this valuation. The cost base is a hybrid: fixed costs include Group central corporate costs (~£75-80m FY26 guidance), group-wide systems investment (£26.6m H1), and the Integration Center network (new Atlanta facility opening 2027). But the majority of cost of goods sold — the £6.2bn cost of sales in H1 — is variable, moving with volume. H1 26 demonstrates the leverage in action: revenue +71.6% and adjusted operating profit +87.6% in constant currency, so incremental operating profit / incremental revenue 2.5% (£71m op profit / £2,857m revenue), which is roughly a Services-margin drop-through. In a bull-case 10-20% revenue upside surprise on FY26 (£800m–1,600m), we would expect incremental adj operating profit of roughly £30-70m, i.e. a ~10-25% uplift to FY26 profit — respectable but not the multi-bagger operating leverage of a pure fixed-cost SaaS platform. The real fixed-cost inflection points are Central costs and the £70-75m capex programme; Services gross margin traction (2-3 pts recovery) would be the biggest incremental margin lever. 2026-09-08 H1 2026

Value-trap signals

• Steady multi-year decline in group gross margin (15.1% → 9.6% at H1) as mix shifts toward low-margin hyperscale distribution.
• Customer concentration (one hyperscaler ~28% of FY25 group revenue).
• Working capital intensity increasing (inventory up 161% in six months).
• Two underperforming Managed Services contracts (Germany, UK) that required incremental provisions taking customer contract provisions from £14.8m to £24.8m.

None of these individually is fatal — the business is genuinely growing, cash-generative on the year, and highly diversified geographically. But the trend is worth monitoring.

Earnings vs. expectations

• FY 2024 (Jan 25 update): Guided in line with market expectations at year-start; delivered adjusted PBT £254m, at the low end of analyst range (£253.6–£266.5m) — a marginal miss impacted by strategic investment step-up and translation FX. 2025-01-28
• FY 2025 (Jan 26 update): Guided PBT no less than £270m vs. consensus £253.6m (range £243.4–£259.0m); delivered £272m — clear beat. 2026-01-22
• FY 2026 progressive upgrades: Q1 update (Apr 26) — guided "comfortably ahead" of £291.3m consensus; H1 trading update (Jul 26) — guided "comfortably ahead" of £313.7m consensus; H1 results (Sep 26) — now guided ≥£380m vs. £340.9m consensus.

Pattern: After a soft 2024 (revenue-mix headwind), the group has produced three consecutive clean beats with progressive upward guidance revisions through 2026. Momentum is squarely positive.

Conviction

4 — high.

• Anchors: clean disclosure with detailed segmental data; well-covered stock with published consensus each quarter (allowing triangulation); consistent 19-year adjusted-EPS growth track record; £9.3bn backlog provides unusual near-term revenue visibility for a reseller.
• Caveats: the appropriate exit multiple for a business whose margin structure is shifting toward lower-margin hyperscale distribution is genuinely uncertain — the historical 12-15x P/E may re-anchor toward 20x if AI is durable, or revert toward 12-14x if hyperscale capex cools. This valuation multiple uncertainty is the biggest driver of range.