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What's in the Offing for TD SYNNEX's (SNX) Q3 Earnings?

Increased demand for hardware and tools, which support remote working, is anticipated to have aided TD SYNNEX's (SNX) Q3 performance.

This story originally appeared on Zacks

TD SYNNEX SNX is scheduled to release third-quarter fiscal 2021 results on Sep 28.

- Zacks

Notably, TD SYNNEX was formerly known as SYNNEX Corporation, but the company changed its name after the acquisition of Tech Data Corporation on Sep 1. As the company’s third quarter ended on Aug 31, the quarterly results would not reflect the financial performance of Tech Data Corporation.

For the fiscal third quarter, the company expects revenues between $4.95 billion and $5.45 billion. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.23 billion, indicating a 19.1% decline from the prior-year period.

Moreover, the company projects fiscal third-quarter non-GAAP earnings between $1.90 and $2.10 per share. The consensus mark of $2.04 for quarterly earnings cents suggests a year-over-year decline of 38.7% from the year-ago quarter’s $3.33.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 25.2%.

SYNNEX Corporation Price and EPS Surprise SYNNEX Corporation Price and EPS Surprise

SYNNEX Corporation price-eps-surprise | SYNNEX Corporation Quote

Factors at Play

The year-over-year expected declines in the top- and bottom-line results reflect loss of revenues and earnings from the separation of the company’s Concentrix business. Notably, the company split its Concentrix business into a separate publicly-traded company on Dec 1, 2020. The separated business has been named Concentrix Corporation CNXC.

Nonetheless, TD SYNNEX’s fiscal third-quarter performance is likely to have benefited from the steady IT spending environment on the back of rapid digital transformation. Per the latest Gartner report, the worldwide IT spending is likely to grow 8.6% year over year to $4.2 trillion.

Increased demand for hardware and tools, which support remote working, is anticipated to have boosted TD SYNNEX’s revenues during the quarter under review. Notably, the COVID-19 pandemic-induced work-and-learn-from-home wave has been driving the sales of peripherals, software, communication, networking, and consumer electronics products. This impressive demand trend is likely to have been conducive to TD SYNNEX’s top-line performance during the fiscal third quarter.

Additionally, the lockdown has bolstered the usage of online and e-commerce services globally. Furthermore, the work-and-learn-from-home necessity has been stoking demand for cloud storage. Therefore, the data-center operators are enhancing their capacities to accommodate the demand spike for cloud services, which is likely to have aided TD SYNNEX’s data-center servers and storage solution businesses during the fiscal third quarter.

Nonetheless, the positive impact of the aforementioned factors might have been partially offset by the prevailing supply-chain disruptions caused by the pandemic. Foreign-exchange headwinds are expected to have been an added concern.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for TD SYNNEX this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

TD SYNNEX has an Earnings ESP of 0.00% and carries a Zacks Rank of 3, at present.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post earnings beats in their upcoming releases:

Alcoa AA has an Earnings ESP of +6.95% and sports a Zacks Rank #1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Worthington Industries WOR has an Earnings ESP of +4.99% and currently carries a Zacks Rank of 2.

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