TD SYNNEX
SNX
recently revealed fiscal 2022 guidance and medium-term financial targets during its 2022 Investor Day event.
The company anticipates adjusted net revenue growth in fiscal 2022 between 6% and 8%. It expects a non-GAAP operating margin of 2.5-2.7% and an adjusted return on invested capital (“ROIC”) of 11% during the fiscal.
TD SYNNEX’s total debt leverage is estimated to be 2.5 times its total assets, while net debt leverage is estimated to be 1.6 times its adjusted EBITDA.
During its first-quarter results, TD SYNNEX raised its earnings guidance for fiscal 2022. It expects non-GAAP earnings to be $11.15-$11.65 per share, up from the earlier projection of $10.80-$11.20 per share for fiscal 2022.
Over the next three to four years, TD SYNNEX expects 6-7% revenue growth at a compounded annual growth rate. It forecast a non-GAAP operating margin of 3% and an adjusted ROIC of 300 basis points above the company’s weighted average cost of capital during the period.
TD SYNNEX’s management stated in its first-quarter conference call that the company 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. The company has now set the target for shareholder returns in the range of 15% to 20%.
For the medium-term, free cash flow is projected to be around $1.5 billion. In the next few years, TD SYNNEX expects a 2% dividend yield. It believes that revenues and non-GAAP operating margins from high-growth technologies are likely to approximately double.
The company has been benefiting from consecutive deal wins since its formation, following the merger of SYNNEX and Tech Data Corporation in the first week of September 2021.
Recently, in January, TD SYNNEX announced a new strategic collaboration agreement with Amazon Web Services, Inc. Through a separate deal, it partnered with MicroStrategy, an enterprise analytics platform that delivers modern, consumer-grade experiences for every role on every device, for the North American region.
In December 2021, TD SYNNEX’s wholly-owned subsidiary, Tech Data India, announced a partnership with Zscaler to enable its partners to purchase security solutions and services as part of the Zscaler Zero Trust Exchange platform directly from Tech Data India.
Prior to that, in October, TD SYNNEX’s legacy company, Tech Data, collaborated with Hewlett Packard Enterprise in the Asia Pacific to grow its distribution of HPE GreenLake cloud services in the region, enabling partners to access a robust set of cloud services that help customers tackle their most challenging business outcomes.
Earlier in October, TD SYNNEX’s legacy company, Tech Data, signed a distributor agreement with Freshworks Inc. to make Freshworks’ suite of products for business solutions available in the India region.
In September, TD SYNNEX partnered with Zscaler, which enabled its partners to purchase security solutions and services as part of the Zscaler Zero Trust Exchange platform directly from the company. In the same month, SNX signed an agreement with a leading Israeli software provider, Indeni, to leverage automated network security solutions.
Earlier in September, TD SYNNEX had won its first distribution contract from Palo Alto Networks to distribute the latter’s cybersecurity solutions to India & SAARC-based customers.
TD SYNNEX is committed to boosting its organic growth with more strategic acquisitions and deal wins that complement and expand its existing capabilities. The merger of TD SYNNEX with Tech Data is expected to be significantly accretive to TD SYNNEX’s bottom line. The deal is anticipated to contribute solid synergy benefits to the company’s top line in the near term.
Zacks Rank & Other Key Picks
TD SYNNEX currently carries a Zacks Rank #2 (Buy). Shares of SNX have fallen 7.1% in the past year.
Some other top-ranked stocks from the broader computer and technology sector are
Advanced Micro Devices
AMD
, sporting a Zacks Rank #1 (Strong Buy),
Axcelis Technologies
ACLS
and
Analog Devices
ADI
, both carrying a Zacks Rank #2. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
The Zacks Consensus Estimate for Advanced Micro Devices’ first-quarter fiscal 2022 earnings has been revised upward by 23 cents to 91 cents per share over the past 60 days. For fiscal 2022, Advanced Micro Devices’ earnings estimates have moved north by 70 cents to $3.99 per share in the past 60 days.
AMD’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 17%. Shares of Advanced Micro Devices have surged 57% in the past year.
The Zacks Consensus Estimate for Axcelis’ first-quarter 2022 earnings has been revised upward by 5 cents to 92 cents per share over the past 60 days. For 2022, Axcelis’ earnings estimates have moved north by 12.4% to $3.99 per share in the past 60 days.
Axcelis’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 30.3%. Shares of ACLS have soared 97.5% in the past year.
The Zacks Consensus Estimate for Analog Devices’ second-quarter fiscal 2022 earnings has been revised upward by 23 cents to $2.08 per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 79 cents to $8.32 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 6%. Shares of ADI have climbed 9.7% in the past year.
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