U.S. Markets closed

SYNNEX (SNX) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research

SYNNEX Corporation SNX is slated to release third-quarter fiscal 2019 results on Sep 24.

Notably, the company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 6.51%.

In the last reported quarter, the company delivered non-GAAP earnings of $2.86 per share, which improved 20.2% from the year-ago quarter and also beat the Zacks Consensus Estimate of $2.71.

Moreover, revenues of $5.72 billion surpassed the Zacks Consensus Estimate of $5.53 billion and increased 17% year over year as well. Adjusted for foreign exchange, revenues rose 18% sequentially.

What to Expect in Q3

For the fiscal third quarter, SYNNEX expects revenues in the range of $5.55-$5.85 billion.  The Zacks Consensus Estimate is pegged at $5.68 billion, suggesting a 15.7% improvement from the figure reported in the year-ago quarter.

Non-GAAP earnings per share are projected in the band of $2.8-$2.92. The Zacks Consensus Estimate stands at $2.86, indicating 11.1% growth from the prior-year reported number.

SYNNEX Corporation Price and EPS Surprise

SYNNEX Corporation Price and EPS Surprise

SYNNEX Corporation price-eps-surprise | SYNNEX Corporation Quote

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

Factors to Consider

SYNNEX’s third-quarter fiscal 2019 results are likely to benefit from the successful integration of Convergys business, which is will further boost its Concentrix revenues.

Moreover, new business wins backed by the growing footprint and enhanced capabilities of all its new consolidations are likely to be the key catalysts.

The company expects its overall business to perform in line with the historical seasonal trends during the fiscal third quarter and achieve a double-digit non-GAAP operating profit margin.

In the fiscal third quarter, Technology Solutions segment is envisioned to perform within seasonal norms. Growth in the underlying market and channel as the company focuses on incremental revenue opportunities is encouraging.

However, growing macroeconomic challenges are a major concern for the company this earnings season. Further, increase in employee compensation may keep margins under pressure. Additionally, adverse foreign exchange fluctuations persist as a headwind.

What Our Model Says

The proven Zacks model clearly indicates that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has high 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 #3, which increases the predictive power of ESP. However, its Earnings ESP of -0.18% in the combination leaves surprise prediction inconclusive for the stock in its upcoming quarterly results.

Stocks With Favorable Combination

Here are a few stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in the upcoming releases:

Keysight Technologies Inc. KEYS has an Earnings ESP of +2.08% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cadence Design Systems, Inc. CDNS has an Earnings ESP of +0.79% and a Zacks Rank #2.

Applied Materials, Inc. AMAT has an Earnings ESP of +0.13% and a Zacks Rank of 3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SYNNEX Corporation (SNX) : Free Stock Analysis Report
Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research