Yahoo Finance TD SYNNEX (SNX) Gains 5% on Q4 Earnings Beat, Dividend Hike
TD SYNNEX Corporation’s SNX shares rose 4.7% on Tuesday after the company reported better-than-expected results for the fourth quarter of fiscal 2022. Moreover, the key metrics — revenues and earnings — registered strong year-over-year growth despite headwinds from unfavorable foreign currency and interest expenses.
TD SYNNEX’s aggressive shareholder return announcement also boosted investors’ confidence in the stock. The company raised the quarterly cash dividend rate by 17% quarter over quarter to 35 cents per share. Moreover, it replaced the previous three-year share repurchase program with the new three-year buyback authorization limit of $1 billion.
Coming to the fourth-quarter performance, SNX’s non-GAAP earnings of $3.44 per share surpassed the Zacks Consensus Estimate of $2.92 and increased 20.3% year over year. The robust bottom line was primarily driven by increased revenues, a mix shift to high-growth technologies, cost discipline and merger synergy executions.
Revenues increased 4.1% year over year to $16.2 billion, surpassing the consensus mark of $15.78 billion. The company continues to witness the strong demand for its technology products and services across all three regions — Americas, Europe, and the Asia-Pacific and Japan — primarily due to strong growth in its Advanced Solutions portfolio and high-growth technologies.
However, an unfavorable foreign currency exchange rate significantly impacted sales growth. On a constant-currency basis, fourth-quarter revenues increased 10.5%.
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 11.5% year over year to $1.08 million, while the gross margin improved 44 basis points to 6.63%. Adjusted SG&A expenses increased to $581.9 million from the year-ago quarter’s $558.7 million.
In the reported quarter, the non-GAAP operating income was up 21.5% to $495.6 million. Moreover, the non-GAAP operating margin increased 44 bps on a year-over-year basis to 3.05%.
TD SYNNEX ended the fiscal fourth quarter with cash and cash equivalents of $522.6 million compared with the $350.8 million witnessed at the end of the fiscal third quarter. During the reported quarter, SNX used $67 million in cash from operational activities.
The company returned $71 million to shareholders in the fourth quarter by repurchasing stocks worth $42 million and paying out $29 million in dividends. During fiscal 2022, it returned $240 million by repurchasing shares worth $125 million and $115 million via dividend payouts.
Guidance
SNX issued dismal guidance for the first quarter of fiscal 2023. For the first quarter, it expects to generate revenues between $15.2 billion and $16.2 billion (midpoint $15.7 billion), which is lower than the Zacks Consensus Estimate of $15.81 billion at the midpoint.
The non-GAAP net income is estimated in the range of $248-$287 million. Moreover, TD SYNNEX projects non-GAAP earnings between $2.60 and $3.00 per share for the first quarter (midpoint $2.80), significantly lower than the consensus mark of $2.99 per share at the midpoint.
Zacks Rank & Key Picks
Currently, TD SYNNEX carries a Zacks Rank #3 (Hold). Shares of SNX have declined 3.2% over the past year.
Some better-ranked stocks from the broader technology sector are Paylocity Holding PCTY, Zscaler ZS and Nutanix NTNX. Paylocity sports a Zacks Rank #1 (Strong Buy) at present, while Zscaler and Nutanix each carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Paylocity’s second-quarter fiscal 2023 earnings has remained unchanged at 70 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved up 3 cents to $4.05 per share in the past 60 days.
Paylocity's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 51.2%. Shares of PCTY have declined 12.3% in the trailing 12 months.
The Zacks Consensus Estimate for Zscaler's second-quarter fiscal 2023 earnings has been revised 3 cents upward to 29 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved up by a penny to $1.24 per share in the past seven days.
ZS’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 27.3%. Shares of the company have declined 61.7% over the past year.
The Zacks Consensus Estimate for Nutanix's second-quarter fiscal 2023 earnings has been revised northward by 2 cents to 11 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved upward by 3 cents to 17 cents per share in the past 60 days.
Nutanix's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 86.1%. Shares of NTNX have slumped 14% in the trailing 12 months.
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