Information technology products distributor
Tech Data Corp. (
TECD
)
is slated to release its third quarter 2013 results before the
opening bell on November 20, 2012. As per the Zacks Consensus
Estimate, Tech Data is expected to earn $1.34 per share on
revenues of $6.22 billion in the quarter.
Prior-Quarter Recap
Tech Data reported a disappointing second quarter of 2013.
Earnings of 88 cents per share were well short of the Zacks
Consensus Estimate of $1.18. However, revenue was slightly better
than the consensus mark of $5.86 billion.
For the third quarter, Tech Data expects year-over-year sales
growth of mid-single-digits in Europe (in €). Tech Data expects
gross and operating margins to increase sequentially. For further
details please see
Tech Data Misses on Lower Sales
.
Estimate Revision Trend
In the run-up to the earnings, only one upward revision was
noticed. However, a downward revision partially offset the
positive effect. As a result, the consensus estimate increased by
a penny over the last 30 days.
We note that on an average, Tech Data has posted an earnings
surprise of (3.54%) in the trailing four quarters, implying that
it has lagged the Zacks Consensus Estimate by the same magnitude
over the period. We do not expect a major change in the earnings
surprise trend for the current quarter.
Conclusion
We believe that Tech Data faces a number of headwinds in the
near term, including a volatile European market (approximately
60.0% of revenue) and weakness in the personal computing and
server market. Moreover, it faces tough competition from
Ingram Micro Inc. (
IM
)
and
SYNNEX Corp (
SNX
)
.
However, Tech Data's strategy of shifting resources from
lower-performing regions to higher-growth regions; cost
reductions and accretive acquisitions will drive growth going
forward. Moreover, the recent acquisition of Brightstar and
certain Specialist Distribution Group ("SDG") operations will
drive growth over the long term.
Thus, we maintain our long-term Neutral recommendation on the
stock. Currently, the stock holds a Zacks #3 Rank, implying a
short-term 'Hold' rating.
INGRAM MICRO (IM): Free Stock Analysis Report
SYNNEX CORP (SNX): Free Stock Analysis Report
TECH DATA CORP (TECD): Free Stock Analysis
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