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TD SYNNEX (SNX) Tops Q1 Earnings Estimates, Ups FY22 Guidance

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TD SYNNEX (SNX - Free Report) started fiscal 2022 on a strong note by reporting overwhelming first-quarter results, wherein the top and the bottom lines surpassed the Zacks Consensus Estimate and marked a strong year-over-year improvement. The company’s fiscal first-quarter non-GAAP earnings of $3.03 per share topped the Zacks Consensus Estimate by 10.6% and increased 60.3% year over year.

Revenues jumped 213.2% year over year to $15.5 billion, mainly due to the inclusion of revenues from the recently completed merger of Tech Data Corporation. The top line also surpassed the Zacks Consensus Estimate of $15.28 billion.

TD SYNNEX was formerly known as SYNNEX Corporation but the company changed its name after the acquisition of Tech Data Corporation on Sep 1, 2021.

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 an upside. However, prevailing industry-wide supply-chain constraints negatively impacted the top line.

TD SYNNEX Corp. Price, Consensus and EPS Surprise

 

Quarterly Details

Gross profit grew 218% year over year to $968.7 million. Gross margin improved 10 basis points (bps) to 6.3%. Adjusted SG&A expenses jumped to $561.9 million from the year-ago quarter’s $148.6 million.

In the reported quarter, non-GAAP operating income was up 176.8% to $431.9 million. However, the non-GAAP operating margin contracted 37 bps on a year-over-year basis to 2.79%.

TD SYNNEX ended the fiscal first quarter with cash and cash equivalents of $510.2 million compared with $994 million witnessed at the end of the fourth quarter of fiscal 2021.

During the fiscal first quarter, SNX used $1.32 billion of cash for operational activities. The cash used reflects the company’s strategic move to increase net working capital to support revenue growth and higher inventory purchases.

Additionally, the company announced that its board of directors declared a quarterly cash dividend of 30 cents per share. The newly approved dividend will be payable on Apr 22 to shareholders of record as of Apr 8.

Guidance

Buoyed by the better-than-expected first-quarter performance, TD SYNNEX raised its earnings guidance for fiscal 2022. For the fiscal, the company now projects non-GAAP earnings in the range of $11.15-$11.65 per share, up from the earlier projection in the band of $10.80-$11.20 per share.

On its fourth-quarter fiscal 2021 earnings call, the company stated that it expects to return approximately 50% of its cash flow to shareholders in the form of dividends and share buybacks over the next two to three years.

SNX also issued strong guidance for the second quarter. For the second quarter of fiscal 2022, it projects to generate revenues between $14.8 billion and $15.8 billion.

Non-GAAP net income is estimated in the range of $231-$270 million. Moreover, TD SYNNEX projects non-GAAP earnings between $2.40 and $2.80 per share for the second quarter.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the broader technology sector include Broadcom (AVGO - Free Report) , Apple (AAPL - Free Report) and Jabil (JBL - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Broadcom’s second-quarter fiscal 2022 earnings has been revised upward by 10.2% to $8.64 per share over the past 30 days. For fiscal 2022, earnings estimates have moved upward by 7.1% to $35.49 per share over the past 30 days.

Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.9%. Shares of AVGO have rallied 29.9% in the trailing 12 months.

The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2022 earnings has been revised upward by 5 cents to $1.43 per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by a penny to $6.16 per share in the past 30 days.

Apple’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while meeting the same on one occasion, the average surprise being 20.3%. AAPL stock has rallied 43.6% over the past year.

The Zacks Consensus Estimate for Jabil’s third-quarter fiscal 2022 earnings has been revised upward to $1.62 per share from $1.56 seven days ago. For fiscal 2022, earnings estimates have been revised upward by 34 cents to $7.25 per share in the past seven days.

Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.5%. Shares of JBL have rallied 20.1% over the past year.


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