Longview

What: High-tech products distributor Tech Data Corp. (NASDAQ:TECD) saw its stock shoot up today, gaining close to 20% in early trading before cooling off a bit. As of this writing (01:40PM ET) shares were up 12.6%. 

So what: Tech Data reported much better-than-expected second quarter earnings today, handily beating Wall Street analyst expectations. Consensus estimates were $0.96 per share, but the company reported $2.09 per share. Even when adjusting for one-time gains, non-GAAP earnings per share of $1.43 still handily beat even the highest analyst projection of $1.02. 

Now what: Tech Data reported revenue fell more than 4% in the quarter, but the decline was due entirely to foreign currency exchange and the strong U.S. dollar. When measured in local currencies, sales actually increased 5% in the Americas (42% of total sales) and 11% in Europe (58% of total sales). The Americas' gain also factored in the company's exit from three South American countries earlier in the year, removing prior year's sales from the comparable data. 

The bottom line is currency headwinds look to be a drag on top line revenue for the foreseeable future, but Tech Data has shown so far it can manage costs and continue to operate profitably in this environment. The stock looks to be relatively cheap, with a price-to-earnings ratio of around 11 times, lower than the recent historical average, and the company's balance sheet remains strong with minimal debt and a slightly growing cash position. 

But with that said, global economic weakness could put further pressure on the company's sales. In other words, it may look like a solid value stock even after today's 10% jump, but its business as a middleman between tech manufacturers, resellers, and consumers could get pinched if Europe and the U.S. get pulled into what's beginning to look like a global economic slowdown. 

Value or potential value trap? It's probably a reasonable value, but the current economic environment could keep it from being a market beater. 

Jason Hall has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.