It has been about a month since the last earnings report for Synnex (SNX Quick QuoteSNX - Free Report) . Shares have lost about 5.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Synnex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

SYNNEX Q3 Earnings and Revenues Top Estimates, Up Y/Y

SYNNEX 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 15.91% due to these changes.

VGM Scores

Currently, Synnex has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Synnex has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.