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Avnet (AVT) Up 0.7% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Avnet (AVT - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Avnet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Avnet Surpasses Q3 Earnings and Revenue Estimates

Avnet reported third-quarter fiscal 2021 non-GAAP earnings of 74 cents per share, surpassing the Zacks Consensus Estimate by 32.1%. The reported figure also increased 95% year over year.

Revenues of $4.9 billion also outpaced the Zacks Consensus Estimate by 7.9% and grew 14% year over year.

Robust sales in Asia boosted revenues for the quarter. Improvement in Americas and Europe, Middle East, and Africa (EMEA) regions also served as tailwinds.

Quarter in Detail

Electronic Components segment revenues rose 13.7% year over year to $4.5 billion on strong growth across all regions.

The Farnell segment’s revenues of $396 million increased 18.2% year over year.

Revenues from the Americas declined 3.5% year over year but the same from the EMEA region grew 4.8%. Notably, Asia revenues increased 36.2% year over year.

Avnet reported gross profit of $568.4 million, up 9.5% year over year. Gross margin contracted 40 basis points (bps) to 11.6%.

Adjusted operating income was $110.5 million, increasing 57.1% year over year. Adjusted operating margin came in at 2.3%, up 62 bps.

Adjusted operating expenses rose 2% year over year to $457.8 million due to the company’s decision to keep operating its existing facility and lease distribution center.

Balance Sheet and Cash Flow

As of Apr 3, 2021, Avnet had cash and cash equivalents of $323 million compared with $376.3 million recorded at the end of the previous quarter.

Long-term debt was $895.9 million as of Apr 3, up from $895.6 million reported in the prior quarter.

Net debt leverage ratio was 2.0 at the end of the reported quarter. Operating cash flow was $197.5 million at the end of third-quarter fiscal 2021. Avnet returned $21 million to shareholders in the form of dividends in the reported quarter.

Fourth-Quarter Fiscal 2021 Guidance

Avnet estimates fiscal fourth-quarter revenues in the range of $4.7-$5.1 billion. Non-GAAP earnings for the current quarter are anticipated in the range of 71-77 cents per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 21.98% due to these changes.

VGM Scores

Currently, Avnet has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Avnet has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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