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Why Synnex Stock Is Soaring Today

By Anders Bylund – Jun 26, 2020 at 2:33PM

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The company crushed Wall Street's second-quarter estimates and set up bullish targets for the next reporting period.

What happened

Shares of Synnex (SNX -2.74%) surged as much as 17% higher on Friday, following the distribution and logistics systems specialist's strong second-quarter earnings report.

So what

Top-line sales fell 3% year over year to $5.53 billion, but the Wall Street consensus stopped at $5.13 billion. Earnings fell 36% to $1.83 per share. Your average analyst had been expecting a net loss of $2.12 per share.

Looking ahead, Synnex offered third-quarter guidance targets. Revenues should drop roughly 8% below the year-ago result to $5.7 billion, and adjusted earnings are expected to land near $2.25 per share, representing a 32% year-over-year decline. These targets are significantly more optimistic than the current Street view, which calls for third-quarter earnings in the neighborhood of $1.15 per share on approximately $5.38 billion in sales.

A consultant sits at his kitchen table with a laptop, wearing headphones and gesturing at the screen.

Image source: Getty Images.

Now what

This company benefits from work-from-home policies across many industries in the COVID-19 era, and the management team is particularly excited about the gradual return to the office.

"Businesses are going to need to acquire more equipment to enable not only the work-at-home that exists, but also the return to office and have flexibility for the associate between the two locations," Synnex CEO Dennis Polk said in the earnings call. "It's not as simple as just providing an associate with a notebook and say, you can work easily from both your home and office. You also need to outfit them with a whole host of products around that."

The company generated $1.2 billion of operating cash flow in the quarter and authorized a $400 million share buyback program. It's no surprise to see share prices rallying today, based on this solid report and management's vote of confidence in future success.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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SYNNEX Corporation Stock Quote
SYNNEX Corporation
$83.14 (-2.74%) $-2.34

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