SNX

TD SYNNEX is executing well as a global IT distributor and solutions aggregator. FY2025 revenue grew 6.9% to $62.5B, but the better story is down the P&L: operating income rose 18.5% to $1.41B, net income 20.1% to $828M, and diluted EPS 25.2% to $9.95 — the latter amplified by a 4.6% reduction in shares outstanding. Operating margin expanded from 2.04% to 2.26% and gross margin from 6.81% to 6.99%, modest but real gains in a business where every basis point matters. Operating cash flow grew 25.8% to $1.53B against just $142M of capex, and management returned $596M via buybacks and $146M in dividends while cash more than doubled to $2.44B. This is a disciplined capital-return compounder.

The catch is the model itself. This is distribution: gross margin is 7.0%, operating margin 2.3%, net margin 1.3%. The 10-K is explicit that the company is 'highly dependent on the end-market demand for IT products' and on partners' strategies, and flags 'continued persistence of inflation, elevated interest rates, market volatility' and 'tariff uncertainty' as demand risks. A thin-margin, demand-cyclical business has limited room to absorb a downturn — net income on $62.5B of revenue is just $828M. Leverage is normal for distribution (liabilities/equity 3.05x) and ROE is a modest 9.8%, consistent with the low-margin reality.