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Tech Data (TECD) to Report Q1 Earnings: What's in Store?
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Tech Data Corp. is set to release first-quarter fiscal 2018 results on Jun 1. Last quarter, the company posted a positive earnings surprise of 12.39%. It delivered positive surprises in three of the trailing four quarters, with an average beat of 8.73%.
Revenues were reported to be $7.4 million in the last quarter, lower than the Zacks Consensus Estimate of $7.5 million.
However, we note that, shares have outperformed the Zacks Retail/Wholesale Computers industry on a year-to-date basis. While the industry gained 10.2%, the stock returned 11.9%.
Let us see how things are shaping up for this announcement.
Factors at Play
Driven by inorganic growth and increasing demand for data center systems, Tech Data is poised for strong growth.
The company completed the acquisition of the Technology Solutions business from Avnet (AVT - Free Report) in Feb 2017. The combination looks promising, with Microsoft’s Azure already added to its Cloud Marketplace. This will possibly have a positive impact on the top line.
But lower demand for legacy enterprise servers and storage might dampen growth. Nevertheless, growing corporate PC demand in North America is a positive.
We also note that the company has a diversified customer base in both North America and Europe. In addition, Tech Data continues to strengthen its position in the small and medium-business (SMB) customer segment in several countries.
However, its exit from businesses in less profitable regions, though a positive in the long run, will weigh on near-term results.
Our proven model does not conclusively show that Tech Data is likely to beat earnings in the soon-to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Tech Data is -12.23%. This is because the Most Accurate estimate is pegged at $1.22 while the Zacks Consensus Estimate stands at $1.39. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter
Zacks Rank: Tech Data’s Zacks Rank #2 when combined with an ESP of -12.23%, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Diodes Incorporated (DIOD - Free Report) with an Earnings ESP of +28.57% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
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Tech Data (TECD) to Report Q1 Earnings: What's in Store?
Tech Data Corp. is set to release first-quarter fiscal 2018 results on Jun 1. Last quarter, the company posted a positive earnings surprise of 12.39%. It delivered positive surprises in three of the trailing four quarters, with an average beat of 8.73%.
Revenues were reported to be $7.4 million in the last quarter, lower than the Zacks Consensus Estimate of $7.5 million.
However, we note that, shares have outperformed the Zacks Retail/Wholesale Computers industry on a year-to-date basis. While the industry gained 10.2%, the stock returned 11.9%.
Let us see how things are shaping up for this announcement.
Factors at Play
Driven by inorganic growth and increasing demand for data center systems, Tech Data is poised for strong growth.
The company completed the acquisition of the Technology Solutions business from Avnet (AVT - Free Report) in Feb 2017. The combination looks promising, with Microsoft’s Azure already added to its Cloud Marketplace. This will possibly have a positive impact on the top line.
But lower demand for legacy enterprise servers and storage might dampen growth. Nevertheless, growing corporate PC demand in North America is a positive.
We also note that the company has a diversified customer base in both North America and Europe. In addition, Tech Data continues to strengthen its position in the small and medium-business (SMB) customer segment in several countries.
However, its exit from businesses in less profitable regions, though a positive in the long run, will weigh on near-term results.
Tech Data Corporation Price and EPS Surprise
Tech Data Corporation Price and EPS Surprise | Tech Data Corporation Quote
Earnings Whispers
Our proven model does not conclusively show that Tech Data is likely to beat earnings in the soon-to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Tech Data is -12.23%. This is because the Most Accurate estimate is pegged at $1.22 while the Zacks Consensus Estimate stands at $1.39. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter
Zacks Rank: Tech Data’s Zacks Rank #2 when combined with an ESP of -12.23%, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
DST Systems, Inc. with an Earnings ESP of +0.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Diodes Incorporated (DIOD - Free Report) with an Earnings ESP of +28.57% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>