A month has gone by since the last earnings report for Avnet (AVT Quick QuoteAVT - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Avnet due for a breakout? 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’s Q4 Earnings Beat, Revenues Meet Estimates

Avnet reported fourth-quarter fiscal 2021 non-GAAP earnings of $1.12 per share, surpassing the Zacks Consensus Estimate by 8.7%. The reported figure also jumped 75% year over year and 51.4%, sequentially.

Revenues jumped 25.7%, year over year, and 6.3%, sequentially, to $5.23 billion. On a constant currency basis, fourth-quarter sales increased 21.5%, year over year, and 6.4%, sequentially. The top-line figure is also in line with the Zacks Consensus Estimate.

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

Quarter in Detail

Electronic Components segment revenues rose 23.7% year over year to $4.79 billion on strong growth across all regions.

The Farnell segment’s revenues of $441.4 million climbed 51.1% year over year.

Revenues from the Americas increased 3.9% year over year. Sales from the EMEA and Asia regions jumped 29.3% and 37.7%, year over year, respectively.

Avnet reported gross profit of $644.9 million, up 35.8% year over year. Gross margin expanded 90 basis points (bps) to 12.3%.

Adjusted operating income was $151.8 million, soaring 253.7%, year over year. Adjusted operating margin came in at 2.9%, up 187 bps.

Adjusted operating expenses flared up 14.1%, year over year, to $493.1 on elevated costs associated with the company’s sales growth.

Fiscal 2021 Highlights

Avnet reported fiscal 2021 non-GAAP earnings of $2.71 per share, surpassing the Zacks Consensus Estimate by 3.4%. The reported figure also increased 32.8% year over year. Revenues jumped 10.8% year over year to $19.53 billion as well as beat the Zacks Consensus Estimate of $19.51 billion.

Balance Sheet and Cash Flow

As of Jul 3, 2021, Avnet had cash and cash equivalents of $199.7 million compared with the $323 million recorded at the end of the previous quarter.

Long-term debt was $1.19 billion as of Jul 3, up from the $895.9 million reported in the prior quarter.

Net debt leverage ratio was 1.9 at the end of fiscal 2021. It generated operating cash flow of $90.9 million in fiscal 2021. Avnet returned $84.3 million to shareholders in the form of dividends during the fiscal.

Q1 Fiscal 2022 Guidance

Avnet estimates fiscal first-quarter revenues in the range of $5.1-$5.4 billion. Non-GAAP earnings for the current quarter are anticipated in the range of $1.02-$1.12 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 39.94% due to these changes.

VGM Scores

At this time, 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 C. 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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.