Why SYNNEX Corporation (NYSE: SNX) stock is going gangbusters today

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SYNNEX Corporation (NYSE: SNX) stock surged over 16.2% on 25th September, 2019 (As of 10:18 am GMT-4; Source: Google finance) after the company posted better than expected results for the third quarter of FY 19. Where the segments are concerned Technology Solutions has posted its highest ever revenue of just over $5 billion, which is an increase of 16% compared to $4.3 billion in the prior quarter. Concentrix revenue was $1.2 billion, essentially flat versus last quarter and up 136% from $492 million in the prior quarter, mainly on back of the Convergys acquisition completed in October of 2018.

SNX’s consolidated gross profit dollars grew 59% to $726 million versus a year ago, and gross margin was just shy of 12%, which is an improvement of 278 basis points from the prior quarter. Several factors have led to the growth of gross profit dollars and margin, most specifically the positive contribution from the Convergys acquisition and overall strong revenue growth in Technology Solutions. Technology Solutions has posted the gross margin of 6%, that has increased 19 basis points from the prior quarter. Concentrix gross margin was 36.7%, which is down 10 basis points from the prior year quarter.

SNX in the third quarter of FY 19 has reported the adjusted earnings per share of $3.30, beating the analysts’ estimates for the adjusted earnings per share of $2.86, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 3 percent to $6.20 billion in the third quarter of FY 19, beating the analysts’ estimates for revenue by 9.26%.

SNX has declared a quarterly cash dividend of $0.375 per common share which will be payable on October 25, 2019 to stockholders of record as of the close of business on October 11, 2019.

For the fourth quarter fiscal 2019, the company expects revenue to be in the range of $5.85 billion to $6.15 billion. The company expects net income to be in the range of $180.5 million to $191.0 million, on a non-GAAP basis. On a non-GAAP basis, the diluted earnings per share is expected to be in the range of $3.50 to $3.70, based on estimated outstanding diluted weighted average shares of 51.1 million. After-tax amortization of intangibles is expected to be in the range of $37.9 million, or $0.73 per share. After-tax acquisition-related and integration expense is anticipated to be $6.3 million, or $0.12 per share.

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