Synnex Corp.: The Price Is Right for This Growth Machine
Synnex Corp. (NYSE:SNX) is a well-respected technology company whose stock has climbed considerably in the last five years. This stock caught my eye after delivering stellar quarter-over-quarter results, and I think you should have this company on your radar. Synnex provides distribution and business process outsourcing (BPO) services to resellers, retailers, and original equipment manufacturers (OEMs), primarily in North America. It operates in two segments, Distribution Services and Global Business Services (GBS).
For revenue-reporting purposes, the company is broken into technology services and Concentrix segments. Synnex competes primarily with Tech Data Corp. (NASDAQ:TECD) and Arrow Electronics (NYSE:ARW) for business. What is interesting to note is that Synnex is more expensive thatn both Tech Data and Arrow Electronics on a price-to-earnings multiple. Tech Data trades at 13.9 times earnings and Arrow Electronics trades at 14.6 times earnings, but Synnex trades at 21.8 times earnings. However, it seems that Synnex growth potential may be greater than both Tech Data and Arrow Electronics.
Synnex has two main sets of operations. With the original nomenclature, the Distribution Services segment distributes information technology (IT) products, such as IT systems, peripherals, system components, software, networking equipment, consumer electronics, and complementary products to value-added resellers, system integrators, and retailers. This segment also offers data center server and storage solutions, as well as contract assembly services including systems design, build-to-order, configure-to-order, and assembly capabilities. It also offers value added services comprising kitting, reconfiguration, asset tagging, and hard drive imaging.