TD Synnex: $2 Billion Buyback Program, Cloud Market, And Cheap

Core Viewpoint - TD Synnex Corporation is expected to make strategic investments in the global hybrid cloud market and artificial intelligence, which could enhance future net sales growth. The company is also implementing ambitious cost optimization efforts that may lead to future free cash flow (FCF) growth. Additionally, the recent approval of a $2.0 billion share repurchase program may attract significant attention from the investment community. The company appears undervalued based on recent growth metrics, with a fair valuation estimated at approximately$177 per share using a conservative discounted cash flow (DCF) model [1][11][15]. Company Overview - TD Synnex Corporation operates as a distributor and solutions aggregator in the information technology industry, with geographic diversification across North and South America, Europe, Asia-Pacific, and Japan. This diversification may reduce revenue volatility during global economic downturns compared to competitors focused solely on the U.S. market [2]. - Collaborations with major companies like Apple, Cisco, and HP Inc. contribute to the company's reputation in the IT industry, with revenue from these partnerships accounting for about 10% to 11% of total quarterly revenue [2]. Latest Quarter's Earnings - In the latest quarter, TD Synnex reported GAAP EPS of $1.66, missing expectations by$0.42, and total revenue of $13.95 billion, missing expectations by$150.26 million. Analysts project EPS growth of 10% in 2025 and 12% in 2026, with the company trading at 7x 2026 earnings [3][4]. Financial Performance - From 2014 to 2023, TD Synnex experienced significant revenue growth, increasing from $13 billion to approximately$56 billion. Net income rose from $180 million in 2014 to$642 million in the latest report, while EBITDA grew from about $443 million to approximately$1.6 billion in 2024 [6][7]. - The company's total equity increased from $1.6 billion in 2014 to about$7.9 billion in 2024, with the book value per share more than doubling to around $93 [8][9]. Cash Flow and Valuation - The company's FCF has shown an upward trend recently, with expectations for continued growth driven by strategic investments in hybrid cloud and AI technologies. The global hybrid cloud market is projected to grow at a CAGR of 21.2$256.04 billion by 2032 [11]. - A three-year $1.0 billion share repurchase program and a new$2.0 billion program are expected to enhance stock demand and potentially lower the company's cost of capital [11]. Analyst Sentiment - Recent reports from analysts indicate a positive outlook for TD Synnex, with six out of twelve analysts recommending a strong buy and four recommending a buy. No analysts have issued sell or strong sell ratings [13]. The company is currently trading at about 7x TTM EBITDA, significantly lower than competitors trading at 11x to 12x [13].