Tech Data Corporation posted fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate, while sales lagged the same. Further, shares of the company fell 6.8% during the trading session on Mar 7. This might be due to the company’s soft bottom-line view of $1.80-$2.10 per share for first-quarter fiscal 2020 whose midpoint of $1.95 clearly came below the Zacks Consensus Estimate of $2.09.
We note that shares of this Zacks Rank #2 (Buy) company have gained 8.2% in the past three months, underperforming the industry’s growth of 19.2%.
Q4 Details
The company reported adjusted earnings of $4.55 per share in the reported quarter. The figure not only surpassed the Zacks Consensus Estimate of $4.10 but also increased 30% on a year-over-year basis.
Moreover, net sales of $10,464.5 million increased 4% year over year, backed by solid sales performance in the Americas with robust growth in cloud, storage, networking and notebooks. However, the figure lagged the consensus mark of $10,706 million. Net sales rose 8% on a constant-currency (cc) basis.
Net sales from the Americas (41% of global net sales) rose 10% to $4.2 billion. Sales from Europe (56% of global net sales) remained flat at $5.9 billion. Sales from Asia-Pacific (3% of global net sales) increased 8% to $327.7 million.
Margins
The company’s gross profit improved 5% to $649.1 million in the reported quarter. Gross margin expanded 5 basis points (bps) from the year-ago quarter to 6.2% driven by hike in vendor price due to a change in trade policy. Adjusted selling, general & administrative (SG&A) expenses rose 3% to $388.3 million in the quarter under review. Adjusted selling, general & administrative expenses as percentage of revenues decreased 29 bps to 3.7% in the reported quarter.
Adjusted operating income came in at $260.9 million, up 21% from $216 million in the year-ago quarter. Adjusted operating margin expanded 34 bps to 2.5%. Segment wise, operating margin expanded 74 bps for the Americas, 4 bps for Europe and 52 bps for Asia-Pacific.
Balance Sheet and Cash Flow
As of Jan 31, 2019, Tech Data had cash and cash equivalents of approximately $799.1 million, long-term debt of $1,300.6 million and total stockholders’ equity of $2,936.7 million.
During the quarter, the company bought back 808,000 shares for $63 million. Tech Data generated cash from operations of $231 million.
Tech Data Corporation Price, Consensus and EPS Surprise
Outlook
Tech Data issued first-quarter fiscal 2020 view, wherein the company anticipates sales to be $8.3-$8.6 billion. Further, it expects results to be affected by unfavorable currency movement. Notably, currency headwinds will affect the bottom line by roughly 7 cents and the top line by nearly 4%. Capital expenditure is projected to be $90-$100 million along with tax rate of 24-26% for first-quarter fiscal 2019.
The company projects top-line growth in low-single digit, while adjusted earnings are expected to rise about 10% for fiscal 2020. Moreover, adjusted operating income is expected to grow mid-single digits on the back of the GBL program, which aims at cost efficiencies. Also, management announced additional $100 million to its existing share repurchase program.
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PC Connection (CNXN - Free Report) , with long-term earnings per share growth rate of 8%, carries a Zacks Rank #2.
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Tech Data Corporation posted fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate, while sales lagged the same. Further, shares of the company fell 6.8% during the trading session on Mar 7. This might be due to the company’s soft bottom-line view of $1.80-$2.10 per share for first-quarter fiscal 2020 whose midpoint of $1.95 clearly came below the Zacks Consensus Estimate of $2.09.
We note that shares of this Zacks Rank #2 (Buy) company have gained 8.2% in the past three months, underperforming the industry’s growth of 19.2%.
Q4 Details
The company reported adjusted earnings of $4.55 per share in the reported quarter. The figure not only surpassed the Zacks Consensus Estimate of $4.10 but also increased 30% on a year-over-year basis.
Moreover, net sales of $10,464.5 million increased 4% year over year, backed by solid sales performance in the Americas with robust growth in cloud, storage, networking and notebooks. However, the figure lagged the consensus mark of $10,706 million. Net sales rose 8% on a constant-currency (cc) basis.
Net sales from the Americas (41% of global net sales) rose 10% to $4.2 billion. Sales from Europe (56% of global net sales) remained flat at $5.9 billion. Sales from Asia-Pacific (3% of global net sales) increased 8% to $327.7 million.
Margins
The company’s gross profit improved 5% to $649.1 million in the reported quarter. Gross margin expanded 5 basis points (bps) from the year-ago quarter to 6.2% driven by hike in vendor price due to a change in trade policy. Adjusted selling, general & administrative (SG&A) expenses rose 3% to $388.3 million in the quarter under review. Adjusted selling, general & administrative expenses as percentage of revenues decreased 29 bps to 3.7% in the reported quarter.
Adjusted operating income came in at $260.9 million, up 21% from $216 million in the year-ago quarter. Adjusted operating margin expanded 34 bps to 2.5%. Segment wise, operating margin expanded 74 bps for the Americas, 4 bps for Europe and 52 bps for Asia-Pacific.
Balance Sheet and Cash Flow
As of Jan 31, 2019, Tech Data had cash and cash equivalents of approximately $799.1 million, long-term debt of $1,300.6 million and total stockholders’ equity of $2,936.7 million.
During the quarter, the company bought back 808,000 shares for $63 million. Tech Data generated cash from operations of $231 million.
Tech Data Corporation Price, Consensus and EPS Surprise
Outlook
Tech Data issued first-quarter fiscal 2020 view, wherein the company anticipates sales to be $8.3-$8.6 billion. Further, it expects results to be affected by unfavorable currency movement. Notably, currency headwinds will affect the bottom line by roughly 7 cents and the top line by nearly 4%. Capital expenditure is projected to be $90-$100 million along with tax rate of 24-26% for first-quarter fiscal 2019.
The company projects top-line growth in low-single digit, while adjusted earnings are expected to rise about 10% for fiscal 2020. Moreover, adjusted operating income is expected to grow mid-single digits on the back of the GBL program, which aims at cost efficiencies. Also, management announced additional $100 million to its existing share repurchase program.
Looking for More? Check These Solid Picks
Boot Barn Holdings (BOOT - Free Report) , with long-term earnings per share growth rate of 20.7%, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Canada Goose Holdings (GOOS - Free Report) , with long-term earnings per share growth rate of 31.3%, carries a Zacks Rank #2.
PC Connection (CNXN - Free Report) , with long-term earnings per share growth rate of 8%, carries a Zacks Rank #2.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1% and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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