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SYNNEX (SNX) to Report Q4 Earnings: What's in the Cards?

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SYNNEX Corporation (SNX - Free Report) is slated to release fourth-quarter fiscal 2018 results on Jan 10.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four reported quarters, the average positive surprise being 3.38%.

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

For the fiscal fourth quarter, SYNNEX expects revenues to be in the range of $5.2-$5.4 billion. The Zacks Consensus Estimate is pegged at $5.4 billion, which is 1.68% higher than the figure reported in the year-ago quarter.

Non-GAAP earnings per share are projected in the band of $2.90-$3.10. The Zacks Consensus Estimate stands at $3.25, representing a year-over-year increase of 16.5%.

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

Factors to Consider

SYNNEX is witnessing growth across all product and services categories and major divisions of customer end markets, which include SMB, enterprise, consumer and the public sector. Geographically, strong growth in the United States and Latin America are tailwinds.

Moreover, the company’s acquisition of Covergys is anticipated to contribute positively in the soon-to-be reported quarter. The company had issued guidance for the fiscal fourth quarter considering the synergies to be drawn from the acquisition for a period of less than two months. It envisions revenues from Convergys to be around $425 million with an adjusted operating margin of approximately 10%.

The Zacks Consensus Estimate for the Concentrix segment is pegged at $710 million, reflecting 33% higher than the figure reported in the previous quarter.

Further, management hopes that the efficiencies and savings gained from this deal will not only help the company with positive financial returns but also enhance customer satisfaction and service.

We note that in order to improve the business mix, the company is replacing lower margin services with higher value-added opportunities. Although its strategy to move away from top customers to focus on more profitable businesses is an overhang on the top line, it is still proving to be beneficial to the bottom line. Notably, the management predicts Hyve business revenues to be down on a year-over-year basis.

The Zacks Consensus Estimate for the Technology Solutions segment is pegged at $4.18 billion, which is 12.7% lower than the figure reported in the preceding quarter.

SYNNEX Corporation Price and EPS Surprise

SYNNEX Corporation Price and EPS Surprise | SYNNEX Corporation Quote

What Our Model Says

Our proven Zacks model clearly indicates that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances 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.

SYYNEX has a Zacks Rank #2 but has an Earnings ESP of 0.00%, which makes surprise prediction difficult.

Stocks With Favorable Combination

Here are a few stocks, which you may consider as our model shows that these have the right combination of elements to beat on earnings in upcoming releases:

QUALCOMM Incorporated (QCOM - Free Report) has an Earnings ESP of +2.45% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Upland Software, Inc. (UPLD - Free Report) has an Earnings ESP of +4.21% and is a Zacks #1 Ranked stock.

Verint Systems Inc. (VRNT - Free Report) has an Earnings ESP of +2.19% and is a #1 Ranked stock.

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