Investment Thesis
TD SYNNEX operates in an extremely competitive wholesale distribution sector with razor-thin margins (7.3% gross, 1.9% net) and poor capital efficiency (ROE 3.7%, ROA 0.9%). Most concerning is the company's negative operating cash flow of -$896M despite accounting profitability, indicating severe working capital deterioration and unsustainable cash burn that poses material financial risk.
Strengths
- Revenue growth of 6.9% YoY demonstrates market share gains and top-line momentum
- EPS growth of 25.2% YoY shows improving per-share economics
- Moderate leverage at 0.41x debt/equity ratio with adequate 6.5x interest coverage
Risks
- Critical: Negative operating cash flow of -$896M indicates severe working capital issues and unsustainable cash burn despite positive net income
- Poor capital efficiency with ROE of 3.7% and ROA of 0.9%, combined with extremely thin margins leaving minimal operational buffer
- Liquidity concerns with quick ratio of 0.71x and current ratio of 1.22x, plus 75% asset financing from debt creating refinancing vulnerability
Key Metrics to Watch
- Operating cash flow trend - critical to determine if negative OCF is temporary or structural business model issue
- Working capital management - inventory and receivables efficiency that explains cash flow deficit
- Debt refinancing capacity and liquidity runway given negative cash generation
Financial Metrics
Revenue
17.2B
Net Income
326.9M
EPS (Diluted)
$4.04
Free Cash Flow
-929.0M
Total Assets
35.1B
Cash
1.6B
Profitability Ratios
Gross Margin
7.3%
Operating Margin
2.9%
Net Margin
1.9%
ROE
3.7%
ROA
0.9%
FCF Margin
-5.4%
Balance Sheet & Liquidity
Current Ratio
1.22x
Quick Ratio
0.71x
Debt/Equity
0.41x
Debt/Assets
75.0%
Interest Coverage
6.50x
Long-term Debt
3.6B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-16T06:57:34.431357 |
Data as of: 2026-02-28 |
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