SYNNEX Corporation SNX delivered non-GAAP earnings of $3.3 per share for third-quarter fiscal 2019, which improved 31.5% from the year-ago quarter and also beat the Zacks Consensus Estimate of $2.86.
Moreover, revenues of $6.2 billion surpassed the Zacks Consensus Estimate of $5.68 billion and increased 28.6% year over year as well.
Robust organic growth as well as the successful integration of the Convergys business is a key driver. Moreover, management noted that forex did not have much negative impact on the company’s top and the bottom line.
SYNNEX’s Technology Solutions revenues were up 16.5% year over year to $5 billion. The shipment of several sizable rollouts and the integration projects that the company won in prior quarters led to the year-over-year increase.
Management mentioned that the major project areas contributing to the company’s growth were PCs, networking and cloud plus software related solutions. The company expects strength in SMB to remain a key catalyst.
Concentrix revenues soared 136% from the prior-year quarter to $1.2 billion, driven by the Convergys acquisition closed last October. New business wins are a positive too. Moreover, the company’s strategy to rebalance its portfolio is an upside.
In the reported quarter, non-GAAP operating income surged 69.5% to $270.5 million. Also, non-GAAP operating margin expanded 105 basis points (bps) on a year-over-year basis to 4.36%.
Non-GAAP operating income for the Technology Solutions was $150 million, up 28% from the year-ago quarter, driven by product mix. Further, non-GAAP operating margin grew 30 bps to 3%
For Concentrix segment, non-GAAP operating income was $121 million, skyrocketing 182% year over year. Additionally, non-GAAP operating margin expanded 170 bps to 10.4%, buoyed by the Convergys consolidation.
SYNNEX Corporation Price, Consensus and EPS Surprise
SYNNEX Corporation price-consensus-eps-surprise-chart | SYNNEX Corporation Quote
Balance Sheet and Other Details
SYNNEX ended the fiscal third quarter with cash and cash equivalents of nearly $262.3 million compared with $271.5 million as of the previous quarter.
During the quarter, cash flow from operations totaled approximately $250 million compared with $108 million sequentially.
For the fiscal fourth quarter, SYNNEX expects revenues in the range of $5.85-$6.15 billion. On a non-GAAP basis, earnings per share are envisioned in the band of $3.5-$3.7.
Zacks Rank and Stocks to Consider
Currently, SYNNEX has a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader technology sector are Rosetta Stone RST, Chegg CHGG and Perficient PRFT, each sporting a Zacks Rank#1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Rosetta Stone, Chegg and Perficient is currently projected to be 12.5%, 30% and 10.8%, respectively.
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