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Synnex (SNX) to Report Q3 Earnings: What's in the Cards?

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Synnex Corporation (SNX - Free Report) is slated to release third-quarter fiscal 2018 results on Oct 3.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 4.3%.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate as well as the guided range. Also, the top and the bottom lines recorded year-over-year improvement.

For the fiscal third quarter, Synnex anticipates revenues of $4.8-$5 billion. The Zacks Consensus Estimate is pegged at $4.89 billion, which is 14.3% higher than the figure reported in the year-ago quarter.

Non-GAAP earnings per share are expected in the range of $2.42-$2.52. The Zacks Consensus Estimate is pegged at $2.46, indicating a year-over-year increase of 13.9%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Synnex is benefiting from strong growth across its portfolio, with strength in PCs, peripherals, networking, security and cloud-based offerings. The company is also performing well in all the end markets including the SMB market.

In the last reported quarter, Synnex’s Technology Solutions segment registered record year-over-year revenue growth of 30%. The company’s organic growth rate of 13% was also better than the overall market.

Within the Technology Solutions segment, the company expects its legacy distribution business to perform in line with historical seasonality. Hyve business is expected to be down on a year-over-year basis because of the timing as the company experienced a sales pull-in from third quarter into second quarter.

The Zacks Consensus Estimate for the Technology Solutions segment is pegged at $4.33 billion, which is 3.4% lower than the figure reported in the previous quarter.

We note that higher mix of Technology Solutions business with the Westcon-Comstor acquisition and customer and product mix within the company’s system design and integration solutions businesses kept margins under pressure in the last reported quarter.

The company anticipates high-volume business with a few customers to remain an overhang on the company’s profit margin in the fiscal third quarter as well. However, operational efficiencies in the company’s Concentrix business is a positive.

Synnex Corporation Price and EPS Surprise

Synnex Corporation Price and EPS Surprise | Synnex Corporation Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or #5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Synnex carries a Zacks Rank #3 but has an Earnings ESP of -0.27%.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Apple (AAPL - Free Report) with an Earnings ESP of +0.31%, and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortinet  (FTNT - Free Report) with an Earnings ESP of +2.57% and a Zacks Rank #1.

Paycom Software (PAYC - Free Report) with an Earnings ESP of +4.52% and a Zacks Rank #1.

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