Earnings Preview: Tech Data - Analyst Blog
November 16 2012 - 4:40AM
Zacks
Information technology products
distributor Tech Data Corp.
(TECD) is slated to release its third
quarter 2013 results before the opening bell on November 20, 2012.
As per the Zacks Consensus Estimate, Tech Data is expected to earn
$1.34 per share on revenues of $6.22 billion in the quarter.
Prior-Quarter
Recap
Tech Data reported a disappointing
second quarter of 2013. Earnings of 88 cents per share were well
short of the Zacks Consensus Estimate of $1.18. However, revenue
was slightly better than the consensus mark of $5.86 billion.
For the third quarter, Tech Data
expects year-over-year sales growth of mid-single-digits in Europe
(in €). Tech Data expects gross and operating margins to increase
sequentially. For further details please see Tech Data Misses on
Lower Sales.
Estimate Revision
Trend
In the run-up to the earnings, only
one upward revision was noticed. However, a downward revision
partially offset the positive effect. As a result, the consensus
estimate increased by a penny over the last 30 days.
We note that on an average, Tech
Data has posted an earnings surprise of (3.54%) in the trailing
four quarters, implying that it has lagged the Zacks Consensus
Estimate by the same magnitude over the period. We do not expect a
major change in the earnings surprise trend for the current
quarter.
Conclusion
We believe that Tech Data faces a
number of headwinds in the near term, including a volatile European
market (approximately 60.0% of revenue) and weakness in the
personal computing and server market. Moreover, it faces tough
competition from Ingram Micro Inc.
(IM) and SYNNEX Corp
(SNX).
However, Tech Data’s strategy of
shifting resources from lower-performing regions to higher-growth
regions; cost reductions and accretive acquisitions will drive
growth going forward. Moreover, the recent acquisition of
Brightstar and certain Specialist Distribution Group (“SDG”)
operations will drive growth over the long term.
Thus, we maintain our long-term
Neutral recommendation on the stock. Currently, the stock holds a
Zacks #3 Rank, implying a short-term ‘Hold’ rating.
INGRAM MICRO (IM): Free Stock Analysis Report
SYNNEX CORP (SNX): Free Stock Analysis Report
TECH DATA CORP (TECD): Free Stock Analysis Report
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