The past six months have been a windfall for TD SYNNEX’s shareholders. The company’s stock price has jumped 53.9%, hitting $244.78 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now still a good time to buy SNX? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive on TD SYNNEX?
Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE: SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions.
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, TD SYNNEX grew its sales at an incredible 25.7% compounded annual growth rate. Its growth surpassed the average business services company and shows its offerings resonate with customers.
2. Economies of Scale Give It Negotiating Leverage with Suppliers
With $69.77 billion in revenue over the past 12 months, TD SYNNEX is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.
3. EPS Surges Higher Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
TD SYNNEX’s EPS grew at an astounding 20.9% compounded annual growth rate over the last two years, higher than its 11.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why we think TD SYNNEX is a great business, and with the recent rally, the stock trades at 12.3× forward P/E (or $244.78 per share). Is now a good time to buy despite the apparent froth? See for yourself in our in-depth research report, it’s free.
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