We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tech Data (TECD) Reports Lower-than-Expected Q2 Earnings
Read MoreHide Full Article
Shares of Tech Data Corp. were down nearly 9% after the company reported dismal second-quarter fiscal 2017 results. Both non-GAAP earnings of $1.42 per share and revenues of $6.354 billion missed the respective Zacks Consensus Estimate of $1.44 and $6.613 billion. On a year-over-year basis, earnings and revenues were down nearly 1% and 3.4%, respectively.
On a constant currency basis, revenues were down 2% mainly due to pound devaluation following the Brexit mandate.
Management blamed an overall weaker-than-expected demand environment, as a result of product cycle, geo-political turmoil and intensifying competition, as the reason for the dismal performance.
Region wise, revenues from the Americas (42% of revenues) fell 3% to $2.7 billion, while the same from Europe (58%) was down 4% to $3.7 billion on a year-over-year basis.
The company’s gross profit in the quarter was $316.5 million, down 3% from the year-ago quarter.
Non-GAAP selling, general & administrative (SG&A) expenses were down 2% year over year to $238.4 million in the reported quarter. As a percentage of revenues, SG&A expenses were 3.75% compared with 3.71% in the year-ago quarter.
As a result, non-GAAP operating income fell 4% year over year to $78.1 million. Non-GAAP operating margin of 1.23% was flat year over year.
Geographically, non-GAAP operating income increased 3% in the Americas, and 4% year over year in Europe.
At the end of the quarter, Tech Data had approximately $697.1 million in cash and cash equivalents compared with $531.2 million as of Jan 31, 2016. Total long-term debt was $349 million. In the quarter, cash used by operations was $91 million.
Outlook
For the third quarter of fiscal 2017, management expects revenues in a range of $6.25 billion to $6.45 billion (on a constant currency basis).Tech Data projects non-GAAP earnings per share in the range of $1.20 to $1.30.
The Zacks Consensus Estimate is pegged at $6.53 billion for revenues and $1.26 for earnings per share.
For the fiscal year, capex is expected to be $44 million
Our Take
Tech Data has been undertaking strategic initiatives to review and strengthen its operations including collaboration with new vendors and expansion of its product offerings. Additionally, the company has been focusing on developing its capabilities in integrated supply chain, value-added services, data center, cloud and consumer electronics and its cost-control measures.
However, its exit from businesses in less profitable regions, though a positive in the long run, will weigh on near-term results. Cautious IT spending outlook as well as a slowdown in the PC market is also a concern. The company may face headwinds because of significant dependence on a handful of customers including Apple (17% of sales in the quarter), HP Inc (14%) and Cisco (11%).
Currently, Tech Data has a Zacks Rank #4 (Sell). Some better-ranked stocks in the tech space include Asure Software, Inc. (ASUR - Free Report) , Ingram Micro Inc. , and GrubHub Inc. . While Asure Software sports a Zacks Rank #1 (Strong Buy), Ingram Micro and GrubHub carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Tech Data (TECD) Reports Lower-than-Expected Q2 Earnings
Shares of Tech Data Corp. were down nearly 9% after the company reported dismal second-quarter fiscal 2017 results. Both non-GAAP earnings of $1.42 per share and revenues of $6.354 billion missed the respective Zacks Consensus Estimate of $1.44 and $6.613 billion. On a year-over-year basis, earnings and revenues were down nearly 1% and 3.4%, respectively.
On a constant currency basis, revenues were down 2% mainly due to pound devaluation following the Brexit mandate.
Management blamed an overall weaker-than-expected demand environment, as a result of product cycle, geo-political turmoil and intensifying competition, as the reason for the dismal performance.
Region wise, revenues from the Americas (42% of revenues) fell 3% to $2.7 billion, while the same from Europe (58%) was down 4% to $3.7 billion on a year-over-year basis.
The company’s gross profit in the quarter was $316.5 million, down 3% from the year-ago quarter.
Non-GAAP selling, general & administrative (SG&A) expenses were down 2% year over year to $238.4 million in the reported quarter. As a percentage of revenues, SG&A expenses were 3.75% compared with 3.71% in the year-ago quarter.
As a result, non-GAAP operating income fell 4% year over year to $78.1 million. Non-GAAP operating margin of 1.23% was flat year over year.
Geographically, non-GAAP operating income increased 3% in the Americas, and 4% year over year in Europe.
TECH DATA CORP Price, Consensus and EPS Surprise
TECH DATA CORP Price, Consensus and EPS Surprise | TECH DATA CORP Quote
Balance Sheet and Cash Flow
At the end of the quarter, Tech Data had approximately $697.1 million in cash and cash equivalents compared with $531.2 million as of Jan 31, 2016. Total long-term debt was $349 million. In the quarter, cash used by operations was $91 million.
Outlook
For the third quarter of fiscal 2017, management expects revenues in a range of $6.25 billion to $6.45 billion (on a constant currency basis).Tech Data projects non-GAAP earnings per share in the range of $1.20 to $1.30.
The Zacks Consensus Estimate is pegged at $6.53 billion for revenues and $1.26 for earnings per share.
For the fiscal year, capex is expected to be $44 million
Our Take
Tech Data has been undertaking strategic initiatives to review and strengthen its operations including collaboration with new vendors and expansion of its product offerings. Additionally, the company has been focusing on developing its capabilities in integrated supply chain, value-added services, data center, cloud and consumer electronics and its cost-control measures.
However, its exit from businesses in less profitable regions, though a positive in the long run, will weigh on near-term results. Cautious IT spending outlook as well as a slowdown in the PC market is also a concern. The company may face headwinds because of significant dependence on a handful of customers including Apple (17% of sales in the quarter), HP Inc (14%) and Cisco (11%).
Currently, Tech Data has a Zacks Rank #4 (Sell). Some better-ranked stocks in the tech space include Asure Software, Inc. (ASUR - Free Report) , Ingram Micro Inc. , and GrubHub Inc. . While Asure Software sports a Zacks Rank #1 (Strong Buy), Ingram Micro and GrubHub carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>