This software provider beat estimates by $0.14 last quarter, and analysts forecast a double-digit growth rate.
SYNNEX (SNX)
from Cabot Benjamin Graham Value Investor
SYNNEX (SNX; Max Buy Price 77.70) offers business process retail and wholesale services to resellers, retailers, software publishers and original equipment manufacturers (OEMs) in the U.S., Japan and internationally.
SYNNEX distributes IT systems, peripherals, system components, software and networking equipment to OEM suppliers such as Hewlett-Packard, IBM, Intel, Microsoft and Seagate. The company also offers services that include direct sales, technical support, customer care, renewals management, back office processing and information technology outsourcing.
SYNNEX’s purchase of IBM’s outsourcing business is exceeding sales and earnings expectations. The company also generated strong growth from existing operations from its technology solutions division in the U.S. The company is gaining notable market share in its primary geographic areas: the U.S., Canada and Japan.
Sales will likely rise 6% and EPS will surge 21% during the 12 months ending 2/28/16. The balance sheet is solid with low debt and ample cash. At 13.6 times current EPS, SNX shares are undervalued. SNX initiated dividend payments in 2014 and will probably increase its dividend in 2015. Additional acquisitions could boost sales and earnings above forecasts.
I expect SNX to reach my Min Sell Price of 105.52 within one to two years.
J. Royden Ward, Cabot Benjamin Graham Value Investor, www.cabot.net, 978-745-5532, March 5, 2015