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SYNNEX (SNX) Q3 Earnings and Revenues Top Estimates, Up Y/Y

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SYNNEX (SNX - Free Report) delivered stellar third-quarter fiscal 2020 results, wherein its top and bottom lines surpassed respective the Zacks Consensus Estimate and marked year-over-year improvements as well. The company’s fiscal third-quarter non-GAAP earnings of $3.33 per share topped the Zacks Consensus Estimate of $2.31 and came in higher than the year-ago quarter’s earnings of $3.30.

Revenues grew to $6.47 billion from the year-ago quarter’s $6.20 billion. The top-line figure also beat the Zacks Consensus Estimate of $5.72 billion.

Further, the company is moving toward its previous announcement of splitting SYNNEX Technology Solutions and Concentrix into two publicly-traded companies. Management believes this strategic action would help add shareholder value and enhance the company's competitive edge. The transaction is expected to be completed during the fourth quarter of calendar-year 2020.

SYNNEX Corporation Price, Consensus and EPS Surprise SYNNEX Corporation Price, Consensus and EPS Surprise

SYNNEX Corporation price-consensus-eps-surprise-chart | SYNNEX Corporation Quote

Quarterly Details

SYNNEX’s Technology Solutions revenues increased 5.1% year over year to $5.3 billion. Concentrix business revenues inched up 0.2% year over year to $1.2 billion.

In the reported quarter, non-GAAP operating income was down 4% to $260 million. Also, non-GAAP operating margin contracted 34 basis points (bps) on a year-over-year basis to 4%.

Non-GAAP operating income for Technology Solutions was $142 million, down 5% from the year-ago quarter. COVID-19-related additional expenses of approximately $8 million for the Technology Solutions segment, including an increase in the allowance for doubtful accounts and staffing costs, were an overhang.

For the Concentrix segment, non-GAAP operating income was $118 million, down 2% year over year, primarily due to the COVID-19-related additional expenses of $13 million.

SYNNEX ended the fiscal third quarter with cash and cash equivalents of $1.45 billion compared with the $1.11 billion witnessed at the end of the fiscal second quarter. During the fiscal third quarter, the company generated $321 million of cash flow from operational activities.

Guidance

For the fourth quarter of fiscal 2020, revenues are expected between $6.45 billion and $6.65 billion.

Non-GAAP net income is estimated in the range of $190.5-$203.5 million. Moreover, the company projects non-GAAP earnings between $3.68 and $3.93 per share.

Zacks Rank & Key Picks

SYNNEX currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector are Zoom Video Communications (ZM - Free Report) , salesforce.com, inc. (CRM - Free Report) and Synaptics Incorporated (SYNA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Zoom, Salesforce and Synaptics is currently pegged at 25%, 18%, and 10%, respectively.

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