Investors in SYNNEX Corporation (NYSE:SNX) had a good week, as its shares rose 2.8% to close at US$74.00 following the release of its first-quarter results. SYNNEX reported US$5.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.36 beat expectations, being 4.0% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the seven analysts covering SYNNEX provided consensus estimates of US$21.5b revenue in 2020, which would reflect a considerable 9.5% decline on its sales over the past 12 months. Statutory earnings per share are expected to tumble 89% to US$1.15 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$23.0b and earnings per share (EPS) of US$10.76 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
The consensus price target fell 19% to US$121, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values SYNNEX at US$165 per share, while the most bearish prices it at US$96.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 9.5% revenue decline a notable change from historical growth of 13% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.7% next year. It's pretty clear that SYNNEX's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for SYNNEX. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of SYNNEX's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for SYNNEX going out to 2021, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 4 warning signs for SYNNEX you should be aware of, and 1 of them can't be ignored.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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