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TD SYNNEX (SNX) Falls as Q2 Earnings & Revenues Miss Estimates
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TD SYNNEX (SNX - Free Report) shares plunged 5% on Tuesday after the company reported lower-than-expected second-quarter fiscal 2023 results. The company reported second-quarter non-GAAP earnings of $2.43 per share, which missed the Zacks Consensus Estimate of $2.50 per share and decreased 10.7% year over year. The decline in the bottom line was primarily caused by lower revenues and increased interest expenses.
Revenues of $14.1 billion decreased 7.9% year over year and missed the consensus mark of $14.37 billion. The year-over-year decline in the top line was mainly due to the weak demand for the company’s Endpoint Solutions amid softness in PC demand post-pandemic. This was partially offset by increased sales across the Advanced Solutions portfolio and high-growth technologies, with demand driven by cloud and data center-related technologies.
An unfavorable foreign currency exchange rate significantly impacted sales growth. On a constant-currency basis, second-quarter revenues decreased 7%.
Region-wise, although TD SYNNEX continues to witness strong demand for its technology products and services across the Asia-Pacific and Japan region (7.3% year-over-year growth), the remaining two regions, the Americas and Europe, witnessed a year-over-year decline of 11% and 4.1%, respectively.
The non-GAAP gross profit declined 1.5% year over year to $968.6 million, while the non-GAAP gross margin improved 45 basis points (bps) to 6.89%. Adjusted SG&A expenses increased to $592.5 million from the year-ago quarter’s $584.9 million.
In the reported quarter, the non-GAAP operating income was down 5.6% to $376 million. Moreover, the non-GAAP operating margin increased by 6 bps on a year-over-year basis to 2.67%.
TD SYNNEX ended the fiscal second quarter with cash and cash equivalents of $852.1 million compared with $510.2 million witnessed at the end of the fiscal first quarter. During the reported quarter, SNX generated operating cash flow and free cash flow of $707.5 million and $677.2 million, respectively. In the first half of fiscal 2023, the company generated operating and free cash flow of $604.8 million and $537.1 million, respectively.
TD SYNNEX returned $93 million to shareholders in the second quarter by repurchasing stocks worth $60 million and paying out $33 million in dividends. In the first half of the fiscal, the company returned $241 million to shareholders by repurchasing stocks worth $175 million and paying out $66 million in dividends.
SNX announced a quarterly cash dividend of 35 cents per share, payable on Jul 28, 2023, to the shareholders of record on Jul 14, 2023.
Guidance
TD SYNNEX issued dismal guidance for the third quarter of fiscal 2023. It expects to generate revenues between $13.5 billion and $14.5 billion for the third quarter. The Zacks Consensus Estimate for third-quarter revenues is pegged at $14.8 billion.
The non-GAAP net income is estimated in the range of $206-$253 million. Moreover, TD SYNNEX projects non-GAAP earnings between $2.20 and $2.70 per share for the third quarter. The consensus mark for third-quarter non-GAAP earnings stands at $2.69 per share.
Zacks Rank & Stocks to Consider
TD SYNNEX currently carries a Zacks Rank #4 (Sell). Shares of the company have declined 2% year to date (YTD).
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by 21 cents to $1.90 per share for the past 30 days. For fiscal 2024, earnings estimates have moved upward by 33 cents to $7.44 per share in the past 30 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have soared 57.5% YTD.
The Zacks Consensus Estimate for Blackbaud’s second-quarter 2023 earnings has been revised 10 cents northward to 93 cents per share in the past 60 days. For 2023, earnings estimates have increased to $3.75 per share from $3.43 60 days ago.
Blackbaud's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 10.4%. Shares of BLKB have rallied 16.5 % YTD.
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 5 cents southward to $2.82 per share in the past 30 days. For 2023, earnings estimates have decreased by 10 cents to $11.94 per share in the past 30 days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 138.5% YTD.
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TD SYNNEX (SNX) Falls as Q2 Earnings & Revenues Miss Estimates
TD SYNNEX (SNX - Free Report) shares plunged 5% on Tuesday after the company reported lower-than-expected second-quarter fiscal 2023 results. The company reported second-quarter non-GAAP earnings of $2.43 per share, which missed the Zacks Consensus Estimate of $2.50 per share and decreased 10.7% year over year. The decline in the bottom line was primarily caused by lower revenues and increased interest expenses.
Revenues of $14.1 billion decreased 7.9% year over year and missed the consensus mark of $14.37 billion. The year-over-year decline in the top line was mainly due to the weak demand for the company’s Endpoint Solutions amid softness in PC demand post-pandemic. This was partially offset by increased sales across the Advanced Solutions portfolio and high-growth technologies, with demand driven by cloud and data center-related technologies.
An unfavorable foreign currency exchange rate significantly impacted sales growth. On a constant-currency basis, second-quarter revenues decreased 7%.
Region-wise, although TD SYNNEX continues to witness strong demand for its technology products and services across the Asia-Pacific and Japan region (7.3% year-over-year growth), the remaining two regions, the Americas and Europe, witnessed a year-over-year decline of 11% and 4.1%, respectively.
TD SYNNEX Corp. Price and EPS Surprise
TD SYNNEX Corp. price-eps-surprise | TD SYNNEX Corp. Quote
Quarterly Details
The non-GAAP gross profit declined 1.5% year over year to $968.6 million, while the non-GAAP gross margin improved 45 basis points (bps) to 6.89%. Adjusted SG&A expenses increased to $592.5 million from the year-ago quarter’s $584.9 million.
In the reported quarter, the non-GAAP operating income was down 5.6% to $376 million. Moreover, the non-GAAP operating margin increased by 6 bps on a year-over-year basis to 2.67%.
TD SYNNEX ended the fiscal second quarter with cash and cash equivalents of $852.1 million compared with $510.2 million witnessed at the end of the fiscal first quarter. During the reported quarter, SNX generated operating cash flow and free cash flow of $707.5 million and $677.2 million, respectively. In the first half of fiscal 2023, the company generated operating and free cash flow of $604.8 million and $537.1 million, respectively.
TD SYNNEX returned $93 million to shareholders in the second quarter by repurchasing stocks worth $60 million and paying out $33 million in dividends. In the first half of the fiscal, the company returned $241 million to shareholders by repurchasing stocks worth $175 million and paying out $66 million in dividends.
SNX announced a quarterly cash dividend of 35 cents per share, payable on Jul 28, 2023, to the shareholders of record on Jul 14, 2023.
Guidance
TD SYNNEX issued dismal guidance for the third quarter of fiscal 2023. It expects to generate revenues between $13.5 billion and $14.5 billion for the third quarter. The Zacks Consensus Estimate for third-quarter revenues is pegged at $14.8 billion.
The non-GAAP net income is estimated in the range of $206-$253 million. Moreover, TD SYNNEX projects non-GAAP earnings between $2.20 and $2.70 per share for the third quarter. The consensus mark for third-quarter non-GAAP earnings stands at $2.69 per share.
Zacks Rank & Stocks to Consider
TD SYNNEX currently carries a Zacks Rank #4 (Sell). Shares of the company have declined 2% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Salesforce (CRM - Free Report) , Blackbaud (BLKB - Free Report) and Meta Platforms (META - Free Report) . Salesforce and Blackbaud each sport a Zacks Rank #1 (Strong Buy), while Meta carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by 21 cents to $1.90 per share for the past 30 days. For fiscal 2024, earnings estimates have moved upward by 33 cents to $7.44 per share in the past 30 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have soared 57.5% YTD.
The Zacks Consensus Estimate for Blackbaud’s second-quarter 2023 earnings has been revised 10 cents northward to 93 cents per share in the past 60 days. For 2023, earnings estimates have increased to $3.75 per share from $3.43 60 days ago.
Blackbaud's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 10.4%. Shares of BLKB have rallied 16.5 % YTD.
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 5 cents southward to $2.82 per share in the past 30 days. For 2023, earnings estimates have decreased by 10 cents to $11.94 per share in the past 30 days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 138.5% YTD.