TD SYNNEX (SNX) Net Margin Beats Expectations, Reinforcing Value Narrative Despite Slowing Growth

TD SYNNEX (SNX) reported a net profit margin of 1.3%, up slightly from last year’s 1.2%, with earnings growing 13.5% year-over-year. This trails its five-year annual average of 15.2%. Forward-looking projections call for annual earnings growth of 7.6% and revenue growth of 4.5%, suggesting a slower pace compared to the company’s historical performance and the broader US market. With strong profit expansion and no flagged material risks, ongoing revenue and margin growth remain the key drivers shaping investor optimism on current valuation levels.

See our full analysis for TD SYNNEX.

Next, we’ll see how these earnings stack up against the most widely discussed narratives in the market, identifying which viewpoints are confirmed and which might be up for debate.

See what the community is saying about TD SYNNEX

Margin Expansion Backed by Recurring Revenue

• Gross margin as a percentage of gross billings slipped by 21 basis points year-over-year, even as software and cloud solutions helped improve consistency in overall margins.
• According to the analysts' consensus view, recurring revenue streams from cloud, cybersecurity, and advanced IT integration are supporting margin resilience and operational efficiencies.
  • High growth in advanced solutions and Hyve drives improved net margins through higher-value offerings.
  • Margin pressures linger, notably with sequential margin declines in Hyve tied to unfavorable exchange rates and shifting project mix. This highlights the ongoing challenge of maintaining margin improvement as business mix evolves.
• Consensus narrative highlights these factors as key levers for long-term margin expansion, despite short-term headwinds.
  📊 Read the full TD SYNNEX Consensus Narrative.

Customer Concentration Sways Growth Stability

• Hyve's reliance on its largest customer fueled 45% of its growth, leaving TD SYNNEX exposed to notable swings in volume and revenue momentum.
• Analysts' consensus view highlights that while strategic diversification across regions and business lines does help spread risk,
  • Persistent customer concentration means the company remains vulnerable if major clients slow spending or exit. Even diversified gains may not offset the impact of volume shifts from those key accounts.
  • Efforts to diversify through public sector, SMB, and APJ markets have shown positive results, but a sudden client loss or order slowdown could still impact margin and stability noticeably.

Attractive Valuation Discounted Versus Industry

• TD SYNNEX is trading at a price-to-earnings ratio of 17.4x, below both its peer average of 17.6x and the US electronic industry average of 24.3x. It is also well below its DCF fair value estimate of $308.32.
• Analysts' consensus narrative suggests this valuation positions TD SYNNEX as a potential value pick despite modest forward growth forecasts.
  • The current share price of $164.02 is at a discount to the DCF fair value and under the sector average multiple, indicating the market may be underappreciating its balanced profit growth and operational strengths.
  • Consensus analyst price target sits at $174.73, about 6.5% above the current share price, signaling a relatively limited but positive upside as long as execution stays consistent with forecasts.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for TD SYNNEX on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Wondering if the figures tell another story? In just a few minutes, you can turn your perspective into a personal narrative. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding TD SYNNEX.

See What Else Is Out There

Despite consistent profit expansion, TD SYNNEX faces near-term challenges in maintaining steady margins because of customer concentration and a fluctuating business mix.

If you want steadier performance through market cycles, check out stable growth stocks screener to find companies delivering reliable growth and resilient earnings.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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