SNX

We rate TD SYNNEX CORP (SNX) as a Buy with a composite score of 66.6/100 at a current price of $158.79. The stock scores above average across the majority of our six quantitative factors and ranks #210 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (93th percentile) and quality (80th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (58/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

TD SYNNEX CORP holds a top-quartile position (#4 of 50) within the Wholesale Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 66.6/100 places it at rank #210 in our full 7,333-stock universe. With a $12.4B market capitalization, TD SYNNEX CORP operates at meaningful scale within the Wholesale Trade sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 12%, though momentum at the 57th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 7% (-15.6pp vs sector) narrow to operating margins of 2% (-1.1pp vs sector) and net margins of 1.3%, yielding a gross-to-net conversion rate of 18%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $158.79, TD SYNNEX CORP appears undervalued relative to its fundamentals. Our value factor score of 93/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 17.2x (roughly in line with the sector median of 19.1x), EV/EBITDA of 9.9x (at a premium), P/B of 1.5x, P/S of 0.2x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to TD SYNNEX CORP. Key risk factors include significant leverage (305% debt-to-equity), the combination of leverage (305% D/E) and thin margins (1.3% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (305% debt-to-equity); the combination of leverage (305% D/E) and thin margins (1.3% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 63th percentile and quality factor at the 80th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (63th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate TD SYNNEX CORP's capital allocation as Poor. Key concerns include elevated leverage (305% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — TD SYNNEX CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, TD SYNNEX CORP receives a Buy rating with a composite score of 66.6/100 (rank #210 of 7,333). Our quantitative framework assigns a Narrow Moat (58/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 67/100.

Our analysis supports a constructive view on TD SYNNEX CORP. The combination of identifiable competitive advantages, high uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.