SYNNEX Corp. (NYSE: SNX) reported earnings for the first quarter of its 2016 fiscal year, ending February 29, 2016, this afternoon. Highlights included gross revenues of $3.126 billion, missing the Wall Street analyst consensus estimate of $3.26 billion, by 4.11 percent. Estimates had ranged from $3.24 billion to $3.28 billion. The business services company reported earnings per share of $1.37, in-line with the analyst consensus of $1.37.
SYNNEX’s gross sales represent year-over-year growth of -2.31 percent and the company’s EPS represents growth of -6.20 percent.
“Our strategic investments in our business continued to pay off and we are pleased with our income and cash flow generation during the quarter. We see opportunities for growth over the balance of 2016,” Kevin Murai, SYNNEX’s president and CEO, was quoted with regard to today’s results.
Management has scheduled a conference call for 5 p.m. ET.
Over the past four quarters, SYNNEX has reported EPS largely in-line with the Wall Street consensus, missing by 3.90 percent in the first quarter of 2015 and beating by as much as 2.80 percent in the third quarter.
Over the past 90 days, full-year EPS estimates for SYNNEX have been cut marginally. For 2016, from $6.96 to $6.78, and for 2017, from $7.58 to $7.48, or 2.59 percent and 1.32 percent respectively.
Going into today’s earnings announcement, analysts were calling for SYNNEX EPS to grow by 2.60 percent in the second quarter of 2016, by 8.00 percent for the full year, by 10.30 percent in 2017, and by 10.50 percent annually over the coming five years.
For the full-2016 year, analysts are expecting SYNNEX gross sales of $13.96 billion, up 4.70 percent from 2015. The 2017 sales forecast calls for SYNNEX sales of $14.60 billion, up 4.60 percent from the 2016 estimate. The analyst consensus is for SYNNEX to deliver $3.39 billion in gross sales in the second quarter of 2016. Estimates range from a low of $3.34 billion to a high of $3.43 billion. Six research firms publish revenue estimates for SYNNEX’s next reported quarterly results.
For the full-2015 year, SYNNEX reported a profit margin of 1.56 percent and an operating margin of 2.73 percent. At the end of 2015, the company reported holding $341.64 million in cash and owing $736.70 million in debt, with a debt to equity ratio of 40.93 percent.
Over the past 10 years, SNX stock has returned close to 410 percent, compared with near 54 percent for the Dow Jones Industrial Average (^DJI) over the same period. Over the past five years, SNX has returned close to 195 percent, compared with about 41 percent for the Dow, and over the past 12 months, SNX has increased in value by near 26 percent, compared with a loss of about 2 percent for the broad market.
SYNNEX, which is headquartered in Fremont, California, reports 72,500 full-time employees and is headed by Chief Executive Officer Kevin Murai who earned $1.85 million, plus $5.38 million in stock-based compensation, in 2015 and Chief Financial Officer Marshall Witt who earned a salary of $815,000 and had no reported stock compensation for 2015.
SYNNEX “provides business process services to resellers, retailers, original equipment manufacturers, and financial and insurance institutions in the United States, North and South America, the Asia-Pacific, Europe, and internationally. It operates in two segments, Technology Solutions and Concentrix,” as reported by Yahoo Finance.
Currently, five brokers publish research on SNX stock. The mean recommendation is 2.6, where 1.0 is a strong buy and 5.0 is a strong sell. The mean is up from 2.3 last week.
The mean price target for SNX shares is $94.60, and the median is $96. Price targets range from $85 to $105. On March 23, Raymond James downgraded SNX stock to “underperform” from “mkt perform.”
Major institutional holders of SNX as of December 31, 2015, included Fidelity, who reported owning 14.96 percent of the company’s outstanding shares; Dimensional Fund Advisors, who owned 7.93 percent; The Vanguard Group, who owned 5.95 percent; BlackRock Fund Advisors, who owned 3.50 percent; and Northern Trust Corporation, who owned 2.59 percent.
SNX shares first came public in November, 2003, as reported by the NASDAQ. SYNNEX first began paying a $0.125 dividend in the fourth quarter of 2014. The dividend was increased to $0.20 quarterly, or $0.80 annually, in the fourth quarter of 2015 and currently yields 0.83 percent.
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