The shares of Fortune 500 company SYNNEX Corp. (NYSE: SNX) continue to remain range-bound between $90 and $95 for the past one month. Considering the fiscal 2016 second-quarter results that beat analysts’ estimates and the buoyant outlook for the third quarter, we can argue that the share price is due for further appreciation. The share ended at $93.91, up 1.82% or $1.68 from the prior close.
The Fremont, California-based company reported Q2 2016 revenue of $3.38 billion, up from $2.92 billion in Q2 2015. The second-quarter revenue went past Zacks estimates of $3.29 billion. Technology Solutions, which is the core business division of the company, reported fiscal 2016 second-quarter revenue of $ 3.04 billion, up from $2.92 billion in the prior year’s second quarter.
The business process sourcing company reported a second-quarter net income of $44.36 million or $1.11 per share, compared to $51.87 million or $1.30 per share in the second quarter last year.
Excluding IBM CRM acquisition and other integration expenses, restructuring charges, and amortization of intangibles, the adjusted (non-GAAP) Q2 net income was $54.76 million or $1.37, down from $60.39 million or $1.55 per share in the second quarter last year. However, the non-GAAP net income exceeded the Zacks estimate of $1.30 per share.
For the fiscal 2016 third-quarter, the revenue is expected to be in the range of $3.40 billion to $3.53 billion. Analysts expect a third-quarter revenue of $3.48 billion.
The Q3 FY16 net income is anticipated to be between $52.5 million and $54.5 million. Synnex predicts non-GAAP net income to be in the range of $60.6 million to $62.6 million.
The GAAP earnings per share (EPS) are forecasted to be in the range of $1.32 to $1.37, while the non-GAAP EPS is expected to be in the range of $1.52 to $1.57. The consensus estimate for the third-quarter is 1.54 per share. Synnex also declared a quarterly dividend of $0.20 per share, payable on July 29, 2016.
Thus, considering the second-quarter revenue and positive third-quarter outlook, we are certain that the share price will trend upwards very soon.
The stock has formed a double bottom in the past six months. The support for the stock exists at 90, while the resistance exists at 95. The RSI is above the trend demarcation reading of 50, thereby indicating the inherent strength in the scrip. Thus, we can expect the stock to break above the resistance level soon. This will lead the stock to the next minor resistance at 100.
So, a binary trader should consider trading a one-touch call option with a strike price of $100 or lower. The recommended expiry date for the contract is between the 2nd and 5th of August.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
