Ingram Micro Provides Upbeat 2016 Outlook at Investor Day - Analyst Blog

Ingram Micro IM outlined some of its 2016 financial forecasts and reviewed its growth catalysts during its recent Investor Day held on Jun 25. The company was confident about meeting or even surpassing its 2015 estimates.

Ingram Micro expects increased sales of mobility, cloud and supply chain solutions to be the primary catalyst for growth. The company's core technology solutions business will also drive growth.

Ingram Micro expects these businesses to help it exceed its 2015 projected revenue growth of 4% to 6%. Moreover, the company expects to surpass its gross margin range of 5.40–5.60% for the period. Management also highlighted that earnings per share will be at the higher-end of the $2.60–$3.10 range, higher than the Zacks Consensus Estimate of $3.02 per share.

For 2016, Ingram Micro expects revenues to increase at a CAGR of 4.0% to 6.0% with non-GAAP earnings per share coming in at $3.40–$3.70. The company also expects its operating cash flow to increase $0.2 billion from 2014 to 2016 to reach $1.2 billion, while operating margins are expected in the range of 175 to 200 basis points of revenues in 2016.

To set things in motion, Ingram Micro recently introduced its Cloud Marketplace on a global platform through which channel partners and professionals can avail the required cloud services. The Ingram Micro Cloud Marketplace has more than 200 cloud-based solutions from over 70 vendors, which include Salesforce.com, VMware and AVG Technologies. The company has added several cloud service providers such as Charter, Logix and Softlayer to its cloud-based offerings.

Ingram Micro's initiative comes at an opportune moment as cost benefits of cloud computing are compelling the companies to engage in massive information technology restructuring and upgrades.

Moreover, Ingram Micro has been teaming with emerging brands in the mobility space to expand its product and service offerings. The company continues to invest to improve its mobile capabilities in all its operating markets. It is also worth noting that the strong performance of the mobility business led to year-over-year improvement in Ingram Micro's first-quarter revenues.

We believe that an improving IT spending trend will help Ingram to post better results, going forward. Moreover, the company's focus on the high-margin market and strategic acquisitions to increase market share are encouraging. The BrightPoint acquisition is also expected to remain a key growth driver for the company.

Though Ingram Micro's significant European exposure and a high debt burden are concerns, we remain fairly optimistic about the company's strategic relationships with network giants such as Juniper Networks Inc. JNPR, Cisco CSCO and International Business Machines Corp. IBM.

Currently, Ingram Micro carries a Zacks Rank #3 (Hold).