It has been about a month since the last earnings report for TD SYNNEX (SNX Quick QuoteSNX - Free Report) . Shares have added about 0.2% in that time frame, outperforming the S&P 500.

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

TD SYNNEX Q2 Earnings and Revenue Miss Estimates

TD SYNNEX reported weaker-than-expected second-quarter fiscal 2024 results. The company reported second-quarter non-GAAP earnings of $2.73 per share, which fell short of the Zacks Consensus Estimate of $2.76.

However, the bottom line increased 12.4% from the year-ago quarter’s earnings of $2.43 per share. The improvement reflects the benefits of efficient cost management, which more than offset the negative impact of a decline in revenues.

SNX’s quarterly revenues decreased 0.8% year over year to $13.95 billion and missed the consensus mark of $14.12 billion. The decline was primarily due to an increase in gross-to-net revenue adjustments as the company’s software-as-a-service offerings continue to represent a greater portion of the overall business.

Quarterly Details

The non-GAAP gross profit rose 0.5% year over year to $973.5 million, while the gross margin improved 9 basis points (bps) to 6.98%. Adjusted SG&A expenses decreased to $585.5 million from the year-ago quarter’s $592.5 million. However, as a percentage of revenues, SG&A expenses increased 4 bps to 5.09%.

The second-quarter non-GAAP operating income was up 3.2% to $388 million. The non-GAAP operating margin increased 11 bps on a year-over-year basis to 2.78%.

TD SYNNEX ended the fiscal second quarter of 2024 with cash and cash equivalents of $1.17 billion compared with $1.03 billion at the end of the fiscal first quarter. The company ended the quarter with a debt of $4.6 billion.

During the reported quarter, SNX used $114.7 million worth of cash for operational activities. It ended the quarter with a negative free cash flow of $152.5 million. In the first half of fiscal 2024, the company generated operating cash flow and free cash flow of $270 million and $191.1 million, respectively.

The company returned $288 million to shareholders in the first quarter by repurchasing stocks worth $254 million and paying out $34 million in dividends. In the first half of fiscal 2024, it returned $523 million through repurchasing $453 million worth of common stocks and paying $70 million in dividends.

During the quarter, SNX’s board of directors also approved a 14% hike in the quarterly dividend to 40 cents per share. The quarterly cash dividend will be payable on Jul 26 to shareholders of record date as of Jul 12.

Guidance

SNX issued guidance for the third quarter of fiscal 2024. For the third quarter, it expects to generate revenues between $13.3 billion and $14.9 billion (midpoint $14.1 billion).

The non-GAAP net income is estimated in the range of $219-$261 million. Moreover, TD SYNNEX projects non-GAAP EPS between $2.55 and $3.05 for the third quarter (midpoint $2.80).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, TD SYNNEX has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise TD SYNNEX has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.