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Avnet (AVT) Rallies 8% on Q1 Earnings and Revenues Beat

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Avnet (AVT - Free Report) kick started fiscal 2022 on an impressive note as it reported overwhelming results for the first quarter on Thursday, wherein both top and bottom lines beat the respective Zacks Consensus Estimate and marked significant year-over-year improvements. Following the fiscal first-quarter result announcement, shares of the electronics component distributor closed 7.5% higher in the extended trading session.

Avnet reported fiscal first-quarter non-GAAP earnings of $1.22 per share, surpassing the Zacks Consensus Estimate by 13%. The reported figure also jumped a whopping 239%, year over year, and 8.9%, sequentially.

Revenues climbed 18.2%, year over year, and 6.9%, sequentially, to $5.58 billion. On a constant currency basis, the fiscal first-quarter sales increased 17.5%, year over year, and 7.6%, quarter on quarter. The top-line figure also surpassed the Zacks Consensus Estimate of $5.23 billion.

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

Avnet, Inc. Price, Consensus and EPS Surprise Avnet, Inc. Price, Consensus and EPS Surprise

Avnet, Inc. price-consensus-eps-surprise-chart | Avnet, Inc. Quote

Quarter in Detail

The Electronic Components segment revenues were up 17.1%, year over year, to $5.13 billion on stellar growth across all regions.

The Farnell segment’s revenues of $455.2 million climbed 33.5%, year over year.

Revenues from the Americas increased 4.4%, year over year. Sales from the EMEA and Asia regions jumped 18% and 26.6%, year over year, respectively.

Avnet reported gross profit of $659.7 million, up 27.8% year over year. The gross margin expanded 80 basis points (bps) to 11.8%.

The adjusted operating income came in at $178.8 million, soaring 174.6%, year over year. The adjusted operating margin came in at 3.2%, up 182 bps.

The adjusted operating expenses flared up 6.7%, year over year, to $481 million. As a percentage of revenues, operating expenses declined to 8.6% from the year-ago quarter’s 9.5%.

Balance Sheet and Cash Flow

As of Oct 2, 2021, Avnet had cash and cash equivalents of $299.1 million compared with the $199.7 million recorded at the end of the previous quarter.

The long-term debt was $1.39 billion as of Oct 2, up from the $1.19 billion reported in the prior quarter.

The net debt leverage ratio was 1.7 at the end of the fiscal first quarter. It used $31 million of cash for operational activities in the quarter. Avnet returned $23.9 million to shareholders in the form of dividends and repurchased its common stock worth $9.6 million during the period.

Q2 Guidance

Avnet estimates fiscal second-quarter revenues in the range of $5.3-$5.7 billion. The non-GAAP earnings for the current quarter are anticipated in the range of $1.20-$1.30 per share.

Zacks Rank & Stocks to Consider

Avnet currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the broader technology sector include Applied Materials (AMAT - Free Report) , Advanced Micro Devices (AMD - Free Report) and CACI International (CACI - Free Report) , all carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Applied Materials, Advanced Micro Devices and CACI is currently pegged at 19.4%, 44.6% and 5.5%, respectively.