It has been about a month since the last earnings report for Avnet (AVT Quick QuoteAVT - Free Report) . Shares have added about 8.6% 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 the most recent earnings report in order to get a better handle on the important drivers.

Avnet’s Q3 Earnings & Revenues Beat Estimates, Up Y/Y

Avnet reported better-than-anticipated third-quarter fiscal 2022 results and provided and impressive guidance for the fourth quarter of fiscal 2022.

The company’s fiscal third-quarter non-GAAP earnings were $2.15 per share, which surpassed the Zacks Consensus Estimate of $1.51. The reported figure jumped a whopping 190.5% year over year and 42.4% sequentially.

Revenues climbed 32% year over year and 11% sequentially to $6.49 billion. On a constant currency basis, fiscal third-quarter sales increased 35.7% year over year and 11.4% quarter over quarter. The top line beat the Zacks Consensus Estimate of $5.62 billion.

Avnet’s quarterly results benefited from a strong demand environment for its products, and the company’s continued investments in e-commerce and expanding customer relationships. Robust sales in the EMEA and Asia bolstered revenues in the reported quarter. An improvement in America served as a tailwind.

Quarter in Detail

The Electronic Components segment’s revenues were up 33.2% year over year to $6.02 billion on stellar growth across all regions.

The Farnell segment’s revenues of $469 million climbed 18.4% year over year.

Revenues from America increased 40.2% year over year. Sales from the EMEA and Asia regions jumped 37.9% and 23.3% year over year, respectively.

Avnet reported gross profit of $813 million, up 43.1% year over year. Gross margin expanded 90 basis points (bps) to 12.5%.

Adjusted operating income came in at $303.7 million, soaring 174.8% year over year. Adjusted operating margin came in at 4.7%, up 243 bps.

While Electronic Components operating margin expanded 178 bps to 4.4%, Farnell operating margin skyrocketed 886 bps to 14.9%.

Balance Sheet and Cash Flow

As of Apr 2, 2022, Avnet had cash and cash equivalents of $199.5 million compared with $167.8 million reported at the end of the previous quarter.

Long-term debt was $922 million as of Apr 2, down from $1.14 billion reported in the prior quarter. The net debt leverage ratio was 1.2 at the end of the fiscal third quarter.

During the first nine months of fiscal 2022, Avnet used cash worth $19.4 million.

Guidance

Avnet estimates fiscal fourth-quarter revenues in the range of $6.0 billion to $6.4 billion (mid-point $6.2 billion), which is higher than the Zacks Consensus Estimate of $5.63 billion at the mid-point. Non-GAAP earnings for the current quarter are anticipated in the range of $1.90-$2.00 per share (mid-point $1.95), higher than the consensus mark of $1.51.

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 38.86% due to these changes.

VGM Scores

At this time, Avnet has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.