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Tech Data (TECD) to Report Q4 Earnings: Is a Beat in Store?

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Tech Data Corporation (TECD - Free Report) is slated to report fourth-quarter fiscal 2019 results on Mar 7. The company outperformed the Zacks Consensus Estimate in two of the trailing four quarters by average beat of 13.8%.

Which Way are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for earnings for the quarter under review stands at $4.10 per share, reflecting year-over-year growth of 17.1%. We also note that the Zacks Consensus Estimate has gone up by 2 cents in the past seven days.

The Zacks Consensus Estimate for revenues is $10,706 million, down 3.5% from $11,093 million reported in the year-ago quarter. We note that total revenues of this wholesale distributor of information technology (IT) products, logistics management and other value-added services increased 10% in the last reported quarter.

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

Factors Aiding the Stock

With the launch of Global Business Optimization Program in the second quarter of fiscal 2019, Tech Data is working toward being a more flexible and cost-effective organization. The components of the program include improving the regional go-to-market models to deliver higher value to channel partners; developing digital processes to create a more responsive, empowered and agile work environment; and improving productivity with the help of increased centralization and standardization throughout the organization. Going ahead, the company anticipates annual cost savings of $70-$80 million from this program, out of which half the savings will be invested to speed up the company’s strategic priorities.

Keeping in these lines, the company focuses on its four-pillar strategy of bolstering end-to-end portfolio, expanding global footprint, improving digital experiences and investing in advanced technology. This will enable the company to work toward achieving sustainable long-term growth.

Further, the company is also making efforts to optimize its product mix by offloading less-profitable and capital-intensive businesses. This will enable Tech Data to strengthen its financial profile and utilize the remaining capital to invest in potential ventures.

Moreover, the increasing demand for data center systems, cloud and mobility products also bode well.  The company expects demand to remain healthy for fourth-quarter fiscal 2019. Also, Tech Data had previously guided sales to be $10.5-$10.9 billion and adjusted earnings of $3.90-$4.20 per share for the said period.

What the Zacks Model Unveils

Our proven model shows that Tech Data is likely to beat estimates this quarter as the stock has the right combination of two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tech Data has a Zacks Rank #2 (Buy) and an Earnings ESP of +0.12%.

3 Other Stocks Poised to Beat Earnings Estimates

Here are few companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Foot Locker, Inc. (FL - Free Report) has an Earnings ESP of +1.26% and a Zacks Rank #2.

Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +2.28% and a Zacks Rank #2.

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