A month has gone by since the last earnings report for TD SYNNEX (SNX Quick QuoteSNX - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is TD SYNNEX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

TD SYNNEX Q4 Earnings Top Estimates, Revenues Miss

TD SYNNEX reported mixed results for the fourth quarter of fiscal 2023, wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line missed the same.

The company reported fourth-quarter non-GAAP earnings per share (EPS) of $3.13, which topped the Zacks Consensus Estimate of $2.69. The bottom-line performance was primarily driven by lower-than-expected interest expenses and income tax rates, along with a reduction in outstanding diluted shares. However, the company’s non-GAAP EPS declined 9% year over year, mainly due to lower-than-expected revenues.

Revenues decreased 11.3% year over year to $14.41 billion and missed the consensus mark of $14.54 billion. The decline in revenues was due to reduced demand for PC ecosystem products across various industries.

This, coupled with the ongoing post-pandemic situation, led to decreased sales in the company’s Endpoint Solutions portfolio. Furthermore, SNX also experienced a decline in revenues due to a shift in business mix and the migration of one of its Hyve customers to the consignment model.

On a constant-currency basis, fourth-quarter revenues decreased 13.3%.

Quarterly Details

The non-GAAP gross profit declined 5.5% year over year to $1.02 million, while the gross margin improved 44 basis points (bps) to 7.07%. Adjusted SG&A expenses increased to $592 million from the year-ago quarter’s $581.9 million.

In the reported quarter, the non-GAAP operating income was down 13.9% to $426.6 million. Moreover, the non-GAAP operating margin decreased 9 bps on a year-over-year basis to 2.96%.

TD SYNNEX ended the fiscal fourth quarter with cash and cash equivalents of $1.03 billion compared with $1.25 billion witnessed at the end of the fiscal third quarter. During the reported quarter, SNX generated $211 million in cash from operational activities in the fourth quarter and $1.41 billion during fiscal 2023.

The company returned $374 million to shareholders in the fourth quarter by repurchasing stocks worth $343 million and paying out $31 million in dividends. During fiscal 2023, it returned $751 million by repurchasing shares worth $621 million and $130 million via dividend payouts.

Guidance

SNX issued guidance for the first quarter of fiscal 2024. For the first quarter, it expects to generate revenues between $14 billion and $14.7 billion (midpoint $14.35 billion).

The non-GAAP net income is estimated in the range of $232-$277 million. Moreover, TD SYNNEX projects non-GAAP EPS between $2.60 and $3.10 for the first quarter (midpoint $2.85).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, TD SYNNEX has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, TD SYNNEX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.