NSIT

We rate INSIGHT ENTERPRISES INC (NSIT) as a Reduce with a composite score of 44.0/100 at a current price of $83.01. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (74th percentile) and stability (58th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (17th percentile) and investment (33th percentile) tempers our overall conviction. We assign a Narrow Moat rating (63/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

INSIGHT ENTERPRISES INC holds a top-quartile position (#0 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 44.0/100 places it at rank #2969 in our full 7,333-stock universe. At $3.6B in market capitalization, INSIGHT ENTERPRISES INC is a mid-cap player in the Retail Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -7% combined with momentum at the 17th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 21% (-15.5pp vs sector) narrow to operating margins of 4% (+0.1pp vs sector) and net margins of 2.0%, yielding a gross-to-net conversion rate of 10%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $83.01, INSIGHT ENTERPRISES INC appears undervalued relative to its fundamentals. Our value factor score of 74/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 16.2x (a 24% discount to the sector median of 21.4x), EV/EBITDA of 8.0x (near the sector median), P/B of 1.6x, P/S of 0.3x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to INSIGHT ENTERPRISES INC. Key risk factors include significant leverage (451% debt-to-equity), the combination of leverage (451% D/E) and thin margins (2.0% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (451% debt-to-equity); the combination of leverage (451% D/E) and thin margins (2.0% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 58th percentile and quality factor at the 44th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate INSIGHT ENTERPRISES INC's capital allocation as Poor. Key concerns include elevated leverage (451% D/E), weak asset returns (ROA 1.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — INSIGHT ENTERPRISES INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, INSIGHT ENTERPRISES INC receives a Reduce rating with a composite score of 44.0/100 (rank #2969 of 7,333). Our quantitative framework assigns a Narrow Moat (63/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 45/100.

Our analysis does not support a constructive view on INSIGHT ENTERPRISES INC at this time. The combination of the current quantitative profile, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.