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TD SYNNEX (SNX) Beats Q3 Earnings Estimates, Misses on Revenues

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TD SYNNEX (SNX - Free Report) delivered mixed third-quarter fiscal 2021 results, wherein the bottom line surpassed the Zacks Consensus Estimate while revenues missed the mark.

Notably, TD SYNNEX was formerly known as SYNNEX Corporation, but the company changed its name after the acquisition of Tech Data Corporation on Sep 1. As the company’s fiscal third quarter ended on Aug 31, the quarterly results would only reflect the legacy SYNNEX’s financial performance.

The company’s fiscal third-quarter non-GAAP earnings of $2.14 per share topped the Zacks Consensus Estimate by 4.9% and improved 13.8% year over year.

However, revenues fell 1.9% year over year to $5.21 billion. The top-line figure also missed the Zacks Consensus Estimate of $5.23 billion.

The company continues to witness strong demand for its technology products and services. In addition, a steady IT spending environment, backed by rapid digital transformations, was a positive. Nonetheless, the prevailing industry-wide supply-chain constraint resulted in a marginal year-over-year decline in the top line.

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

Gross profit grew 5.1% year over year to $312.6 million, while gross margin expanded 40 basis points (bps) to 6%. Total selling, general & administrative (SG&A) expenses decreased to $164.4 million from the year-ago quarter’s $165.1 million.

In the reported quarter, non-GAAP operating income was up 13.2% to $168.2 million. Also, non-GAAP operating margin expanded 43 bps on a year-over-year basis to 3.23%.

SYNNEX ended the fiscal third quarter with cash and cash equivalents of $4.05 billion compared with the $1.7 billion witnessed at the end of the fiscal second quarter.

During the fiscal third quarter, the company used $56 million of net cash for operational activities.

Additionally, the company announced that its board of directors has declared a quarterly cash dividend of 20 cents per share. The newly-approved dividend will be payable on Oct 29 to shareholders of record as of Oct 15, 2021.

Guidance

For the fourth quarter of fiscal 2021, revenues are expected between $15 billion and $16 billion.

The non-GAAP net income is estimated in the range of $242-$272 million. Moreover, the company projects non-GAAP earnings between $2.50 and $2.80 per share.

Zacks Rank & Key Picks

Currently, TD SYNNEX carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Microsoft (MSFT - Free Report) , STMicroelectronics N.V.  (STM - Free Report) , and NVIDIA Corporation (NVDA - Free Report) , all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Microsoft, STMicroelectronics, and NVIDIA is currently pegged at 11.1%, 5%, and 19.5%, respectively.

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