Tech Data reported mixed first-quarter 2015 results. Earnings of
$0.72 per share missed the Zacks Consensus Estimate by $0.18 while
revenues of $6.73 billion beat the same. We believe that sluggish
IT spending will hurt Tech Data's top-line growth in fiscal 2015.
The company's growing exposure to volatile European markets remains
a concern. Moreover, its back-end loaded guidance will remain a
headwind in fiscal 2015. Nevertheless, Tech Data will benefit from
stabilization in personal computer sales through the rest of
calendar year 2014. The completion of the SAP implementation will
improve execution. Tech Data's partnership with Google and VMware
will drive top-line growth, going forward. Further, its superior
customer service and improving market share in the Americas are the
major positives, moving ahead. Thus, we maintain a Neutral
recommendation on the stock and set a price target of $70.00.
Incorporated in 1974 and based in Clearwater, Fla., Tech Data
Corporation (TECD) is one of the leading wholesale distributors of
information technology (IT) products, logistics management and
other value-added services. The company distributes and markets
more than 150,000 products from more than 600 manufacturers and
Broadline (notebooks, tablets, desktop systems, printers,
supplies and components) products accounted for 46.0% of sales in
2014, followed by Data Center (servers, server accessories,
networking products, storage hardware and networking support
services) at 23.0%, software at 18.0%, mobility at 9.0% and
consumer electronics at 4.0%.
Value added resellers contributed 51.0% of sales, direct
marketers & retailers 28.0% and corporate resellers 21.0% of
sales in fiscal 2014. The company generated approximately 21.0% of
sales in fiscal 2014 from products purchased from
Tech Data reported revenues of $26.82 billion in 2014. The
company sells products in more than 100 countries and generates
revenues primarily from two geographical segments: the Americas
(including North and Latin America) and Europe. In fiscal 2014, the
Americas segment reported sales of $10.19 billion (38.0% of sales),
while Europe reported sales of $16.63 billion (62.0% of sales).
Tech Data faces significant competition from Ingram Micro Inc.,
Synnex Corp., Arrow Electronics Inc. and Avnet, Inc. along with
some regional and local distributors.
Tech Data Corporation (TECD): Read the Full
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