Synnex Still Has Room to Run

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– By Nicholas Kitonyi

Shares of Synnex Corp. (NYSE:SNX) surged more than 7% on Wednesday after another impressive performance in the third quarter. The company announced results on Tuesday after the market closed that beat analysts’ expectations on revenue and earnings.

Synnex Still Has Room to Run
Synnex Still Has Room to Run

Shares of the company are now up about 11.77% over the last 30 days and about 115% since bottoming on March 18. This results in a net year-to-date gain of just 8.85%.

Factoring in the company’s third-quarter earnings results, Synnex’s trailing 12-month price-earnings ratio now stands at about 11.19. This prices the stock below the Peter Lynch earnings line of 15. At the current price of about $141.87 per share, Synnex’s stock has the potential to rally toward $190 per share before the end of the year.

For reference, Synnex posted non-GAAP earnings of $4.26 per share in the fourth quarter of 2019. If you add that to the current nine-month earnings of $8.42, the cumulative earnings per share for the last four quarters (including the fiscal third quarter) is $12.68.

Highlights from recent quarter results

In the company’s fiscal third-quarter results, Synnex posted non-GAAP earnings of $3.33 per share, which beat consensus estimates of $2.31 and represented a slight improvement from earnings of $3.30 per share posted in the same period last year.

The company’s revenue grew to $6.47 billion, which also outperformed Wall Street’s estimates of about $5.72 billion.

Cash and cash equivalents grew to $1.45 billion, up from $1.11 billion reported at the end of the fiscal second quarter. Operating cash flow was $321 million.

Synnex expects to post non-GAAP earnings of $3.68 to $3.93 per share in the fiscal fourth quarter on about $6.45 billion to $6.65 billion in revenue.

The company will be splitting into two publicly listed