Tech Data tumble not hard to process

Clearwater-based Tech Data Corp., the Gulf Coast's largest company, posted favorable results in its last earnings report. So why did its stock take a 10% tumble after the numbers were released?

Tech Data's share value fell back to around $48 on May 23 after the company posted 13% higher quarterly revenue at $6.3 billion and 7% earnings growth at $48.7 million. The stock has stabilized at that price, with a 52-week range of $34.82 to $54.25, according to Yahoo! Finance.

Investopedia tried to explain the fallout, saying revenue came up just short of analysts' estimates and institutional investors expressed concern about soft consumer demand in Europe. Business in the Americas improved over the year, but not as much as analysts forecast.

“When a company operates in an industry with razor-thin margins, even the slightest disappointment can send investors into full flight,” Investopedia states. Still, the website continued, Tech Data remains a value play.

“Even if Tech Data cannot match past levels of revenue growth or free cash flow conversion, the stock looks undervalued at today's levels. As a rule, it is better to avoid low-margin businesses with minimal durable advantages (the so-called economic moats) but there are exceptions to every rule,” the Investopedia report concludes. “At the right price, Tech Data is worth a look as an undervalued play on tech demand growth.”