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Bull of the Day: Tech Data Corp. (TECD)

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Tech Data Corporation (TECD - Free Report) is one of the world’s biggest technology distributors. The company certifies, trains, instructs, and supports their reseller customers, and helps configure, install, and finance their purchases. Tech Data’s end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow, and advance.

Q3 Earnings Impressed Investors

At the end of last November, Tech Data reported third quarter numbers that blew straight past estimates.

Adjusted earnings of $3.02 per share handily beat the Zacks Consensus Estimate of $2.19 per share, while adjusted net income soared 50% to $116.3 million.

Revenues climbed 11% from the prior year period to $9.34 billion, also beating our consensus estimate. All of its regions performed very well, with sales in the Americas, Europe, and Asia Pacific up 13%, 9%, and 6%, respectively.

Tech Data also paid down $100 of debt and repurchased $44 million in Q3.

In the earnings release, CEO Rich Hume said that the strong results seen in the third quarter “reflect the powerful combination of our end-to-end portfolio and strong execution by our global teams. Theyalso validate the strategic role we play in the IT supply chain -- delivering high value through our end-to-end portfolio to channel partners across the broad spectrum of IT products and solutions."

Price Performance & Rising Estimates

Over the past three months, TECD has gained over 30%, and shares have bounced back nicely from the market pullback seen at the end of last year.

Estimates have been rising lately too, pushing the stock towards a Zacks Rank #1 (Strong Buy).

For the current fiscal year, Tech Data’s earnings are expected to grow around 20% year-over-year. Four analysts have upped their estimate, and the Zacks Consensus Estimate has moved nearly a dollar higher in the past 60 days from $9.99 to $10.94 per share.

Next year looks pretty strong too. The consensus estimate sits at $11.50 per share, with three upward revisions in the last two months.

Bottom Line

Looking ahead to its current fiscal fourth quarter, Tech Data expects revenues in the range of $10.5 billion to $10.9 billion on top of adjusted EPS in the range of $3.90 to $4.20 per share. The lower ends of the both the top and bottom line are well above consensus estimates. The current Zacks Consensus Estimate for earnings and revenues falls roughly in the middle of both estimate ranges ($4.08 per share and $10.7 billion).

Like most tech stocks, TECD couldn’t escape that volatile run that hit the broader market late last year, but the company appears to be on a good path going forward, and looks to continue its outperformance. For those investors looking for a technology stock to add to their portfolio, TECD should definitely be on the shortlist.

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