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TD SYNNEX (SNX) Q2 Earnings Beat Estimates, Revenues Miss

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TD SYNNEX SNX reported mixed results for the second quarter of fiscal 2022, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, both the metrics marked strong growth on a year-over-year basis.

The company’s fiscal second-quarter non-GAAP earnings of $2.72 per share topped the Zacks Consensus Estimate by 4.2% and increased 30.1% year over year. Revenues jumped 160.7% year over year to $15.27 billion, mainly due to the inclusion of revenues from the last year’s merger of Tech Data Corporation. However, the top line fell short of the consensus mark of $15.34 billion.

TD SYNNEX was formerly known as SYNNEX Corporation, but the company changed its name after the acquisition of Tech Data Corporation on Sep 1, 2021.

The company continues to witness the strong demand for its technology products and services. In addition, a steady IT spending environment, backed by rapid digital transformations, was an upside. However, the prevailing industry-wide supply-chain constraints negatively impacted the top line.

TD SYNNEX Corp. Price, Consensus and EPS Surprise

TD SYNNEX Corp. Price, Consensus and EPS Surprise
TD SYNNEX Corp. Price, Consensus and EPS Surprise

TD SYNNEX Corp. price-consensus-eps-surprise-chart | TD SYNNEX Corp. Quote

Quarterly Details

The gross profit grew 190% year over year to $955.8 million, while the gross margin improved 70 basis points (bps) to 6.3%. Adjusted SG&A expenses jumped to $584.9 million from the year-ago quarter’s $159.2 million.

In the reported quarter, the non-GAAP operating income was up 134% to $398.3 million. However, the non-GAAP operating margin contracted 29 bps on a year-over-year basis to 2.61%.

TD SYNNEX ended the fiscal second quarter with cash and cash equivalents of $521.5 million compared with the $510.2 million witnessed at the end of the first quarter. During the fiscal second quarter, SNX generated $1.04 billion in cash from operational activities.

The company repurchased shares worth $29 million in the second quarter and $53 million in the first half of fiscal 2022.

Additionally, TD SYNNEX announced that its board of directors declared a quarterly cash dividend of 30 cents per share. The newly approved dividend will be payable on Jul 29 to shareholders of record as of Jul 15.

Guidance

TD SYNNEX reaffirmed its non-GAAP earnings guidance for fiscal 2022, despite assuming a 14-cent headwind from the further devaluation of the Euro against the US dollar. For the fiscal, the company continues to project non-GAAP earnings in the range of $11.15-$11.65 per share.

On its fourth-quarter fiscal 2021 earnings call, the company stated that it expects to return approximately 50% of its cash flow to shareholders in the form of dividends and share buybacks over the next two to three years.

SNX issued strong guidance for the third quarter. For the third quarter of fiscal 2022, it projects to generate revenues between $14.5 billion and $15.5 billion.

The non-GAAP net income is estimated in the range of $241-$279 million. Moreover, TD SYNNEX projects non-GAAP earnings between $2.50 and $2.90 per share for the third quarter.

Zacks Rank & Stocks to Consider

Currently, TD SYNNEX carries a Zacks Rank #4 (Sell). Shares of SNX have plunged 18.8% year to date (“YTD”).

Some better-ranked stocks worth considering from the broader technology sector are ON Semiconductor ON, Analog Devices ADI and Monolithic Power Systems MPWR, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ON's second-quarter 2022 earnings has been revised to $1.26 per share from $1.05 over the past 60 days. For 2022, earnings estimates have moved north by 17.5% to $4.91 per share in the past 60 days.

ON's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.8%. Shares of ON have plunged 22.2% YTD.

The Zacks Consensus Estimate for Analog Devices' third-quarter fiscal 2022 earnings has been revised upward by 24 cents to $2.42 per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 9.6% to $9.24 per share in the past 60 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.7%. Shares of ADI have decreased 15.5% YTD.

The Zacks Consensus Estimate for Monolithic's second-quarter 2022 earnings has been revised upward by 57 cents to $2.94 per share over the past 60 days. For 2022, the Zacks Consensus Estimate for Monolithic's earnings has moved north by $1.98 to $11.61 per share in the past 60 days.

Monolithic's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 8%. Shares of MPWR have plunged 19.5% YTD.


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