SNX - Embedded Expectations Analysis - 2021 05 05
SYNNEX Corporation (SNX:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.0x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may have concerns about the IT spending environment, their Tech Data merger, and their DSO and inventory turn performanceSpecifically, management may have concerns about the sustainability of the strong IT spending environment as well as their branding strategy with Tech Data. In addition, they may be overstating the potential of their Westcon-Comstor acquisition and the ability of their Tech Data merger to solidify them as a diversified global solutions distributor. Finally, they may lack confidence in their ability to sustain improvements in DSO and inventory turns, capitalize on IT ecosystem changes for end-user customers, and execute Tech Data's original investment strategy
Synnex is a business process services company, providing a range of distribution, logistics and integration services for the technology industry and providing outsourced services focused on customer engagement to a range of enterprises. The company's segments are: Technology Solutions, which distributes peripherals, information technologysystems including data center server and storage solutions, system components, software, networking, communications and security equipment; and Concentrix, which provides a portfolio of solutions and business services focused on customer engagement, process optimization, technology innovation, front and back-office automation and business transformation to clients.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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