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

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Zacks Equity Research
·4 min read
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SYNNEX Corporation SNX is slated to release third-quarter fiscal 2020 results on Sep 29.

For the quarter, the company expects revenues between $5.5 billion and $5.9 billion. The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $5.72 billion, indicating a 7.8% decline from the prior-year figure.

Moreover, the company expects non-GAAP earnings between $2 and $2.50 per share. The consensus mark for earnings of $2.31 cents suggests a year-over-year slump of 30% from $3.30 reported in the year-ago quarter.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 74.01%.

SYNNEX Corporation Price and EPS Surprise

SYNNEX Corporation Price and EPS Surprise
SYNNEX Corporation Price and EPS Surprise

SYNNEX Corporation price-eps-surprise | SYNNEX Corporation Quote

Factors at Play

Supply-chain disruptions caused by the coronavirus pandemic are expected to have adversely impacted SYNNEX’s fiscal third-quarter performance. Notably, Southeast Asia, China and Taiwan are key markets for the company, and the aforementioned factors are likely to have dampened SYNNEX’s sales in these markets.

Furthermore, organizations are pushing back their big and expensive technology products due to the slowdown in global economic growth, which has been a major downside in the fiscal third quarter. Foreign-exchange headwinds are expected to have been an added concern.

Nonetheless, negative impact of the aforementioned factors might have been partially offset by increased demand for hardware and tools, which support remote working. Notably, the coronavirus-induced work-and-learn-from-home wave is likely to have bolstered sales of peripherals, software, communication, networking, and consumer electronics products. This solid demand trend is anticipated to have been conducive to SYNNEX’s fiscal third-quarter top-line performance.

Additionally, the work-and-learn-from-home necessity has been stoking demand for cloud storage. Furthermore, the lockdown has bolstered the usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand spike for cloud services, which is likely to have benefited SYNNEX’s data-center servers and storage solution businesses.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for SYNNEX this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter. But that’s not the case here.

SYNNEX has an Earnings ESP of 0.00% and a Zacks Rank of 3.

Stocks With the Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Cintas Corporation CTAS has an Earnings ESP of +9.51% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Citizens Financial Group, Inc. CFG has an Earnings ESP of +6.19% and holds a Zacks Rank of 2 currently.

Synovus Financial Corp. SNV has an Earnings ESP of +1.47% and carries a Zacks Rank #2, at present.

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