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The Zacks Analyst Blog Highlights: Avnet, Arrow Electronics, Anixter International, Richardson Electronics and Sunoco Logistics Partners

AVT ARW AXE SXL

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For Immediate Release

Chicago, IL – November 7, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Avnet, Inc. (AVT - Analyst Report), Arrow Electronics Inc. (ARW - Analyst Report), Anixter International Inc. (AXE - Snapshot Report), Richardson Electronics Ltd. and Sunoco Logistics Partners L.P. (SXL - Analyst Report).

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Here are highlights from Tuesday’s Analyst Blog:

Avnet Acquires Genilogix

Avnet, Inc. (AVT - Analyst Report) recently declared the acquisition of Genilogix LLC. This was done with the clear intent of strengthening Avnet’s HP software solutions and Cloud services. This acquisition shall not only be immediately accretive to Avnet’s earnings but will also help it achieve its return on capital (ROC) target of 12.5%.

 

Genilogix is primarily engaged in providing various IT services to its clients for augmenting the safety, efficiency and quality of mission-critical applications. Genilogix is considered as a HP Software Enhanced Elite Partner, which offers application lifecycle management solutions to various enterprises. The company’s revenue was nearly $23 million in 2011.

 

Avnet expects the acquisition to broaden its footprint in the IT solutions market and help the company to meet the increasing customer demand through providing cost effective solutions. The company’s recently acquired Pepperweed Consulting along with Genilogix will be involved in augmenting Avnet’s IT service offerings in the field of healthcare and government. Post acquisition, Genilogix will conflate with Avnet Technology Solutions’ Americas business. 

 

The company’s continuous acquisitions are expected to be a good contributor to its revenue stream going forward. During fiscal 2012, the company completed acquisitions of eleven businesses with total annualized revenues of $900 million. These acquisitions are expected to bolster its performances quite comprehensively and augment its product base going forward.

 

Avnet’s domestic and foreign operations are subject to significant competitive pressures. It faces stiff competition from Arrow Electronics Inc. (ARW - Analyst Report), which remains a fiercely formidable rival. Arrow’s recent acquisition of ALTIMATE Group, Global Link Technology and Redemtech can turn out to be highly profitable, thereby posing a serious threat to the future of Avnet. In addition, big players to keep an eye out for in this regard include Anixter International Inc. (AXE - Snapshot Report), and Richardson Electronics Ltd. .

 

The current Zacks Consensus Estimates for Avnet are 83 cents and $3.22 for the second quarter of fiscal 2013 and for fiscal 2013, respectively. The estimates represent a year-over-year growth of (27.7%) for the second quarter and (20.6%) for fiscal 2013. The company currently retains a Zacks #5 Rank, which translates into a short-term ‘Strong Sell’ rating. We also maintain a long-term ‘Underperform’ recommendation on the stock.

 

Earnings Preview: Sunoco Logistics

 

Philadelphia-based Sunoco Logistics Partners L.P. (SXL - Analyst Report), a master limited partnership (MLP), is scheduled to release its third-quarter 2012 earnings after the markets close on November 7, 2012.

Second Quarter Recap

The partnership announced a jump in its second quarter 2012 profits, driven by strong demand for its crude oil business.

The partnership’s diluted earnings per unit (“EPU”) came in at $1.28, significantly ahead of the Zacks Consensus Estimate of 72 cents and the year-ago period profit of 80 cents. Revenues of $3,318.0 million were up 36.7% from the second quarter of 2011 and also beat the Zacks Consensus Estimate by 3.9%.

Importantly, the partnership raised its quarterly distribution by 9.9% sequentially and 16.0% year over year to 47 cents per unit or $1.88 per unit annualized, representing the twenty-ninth consecutive quarterly distribution increase. Distributable cash flow increased 56.6% year over year to a record $166.0 million.

Estimate Revisions Trend

Agreement

In the last 30 days, out of the total 9 estimates, only 1 was revised upward for the third quarter of 2012. Also, for the fourth quarter of 2012, out of the total 8 estimates, only 1 upward revision was witnessed, while there were no downward revisions over the same time frame. For the third quarter, none of the estimates witnessed any movement in the last 7 days. For the full year 2012, 2 out of the 9 estimates moved up over the last 30 days.

Magnitude

Over the last 7 days, the current Zacks Consensus Estimate has remained unchanged for the third quarter of 2012. The Zacks Consensus Estimate for the third quarter 2012 increased by 2 cents to 84 cents from 82 cents per share in the past 30 days. For full year 2012, the estimate increased by 7 cents to $3.74 over the past 30 days while it increased 4 cents over the past 7 days.

Surprise History

With respect to earnings surprise, the results of the company surpassed our expectations in each of the last four quarters. The earnings surprise in the last four quarters ranged from 33.87% to 63.89%. The average surprise over the last four quarters remained at 50.52%.

 

 

 

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