A month has gone by since the last earnings report for Avnet (AVT Quick QuoteAVT - Free Report) . Shares have added about 2.3% in that time frame, underperforming 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 catalysts.

Avnet Beats Q3 Earnings Estimates, Strong Guidance for Q4

Avnet reported better-than-expected third-quarter fiscal 2023 results and provided impressive guidance for the fourth quarter of fiscal 2023.

The company’s fiscal third-quarter non-GAAP earnings were $2.00 per share, which surpassed the Zacks Consensus Estimate of $1.78. However, the reported figure decreased 7% year over year due to the negative impacts of higher interest expenses and an unfavorable currency exchange rate of 37 cents and 9 cents, respectively.

Revenues advanced 0.4% year over year to $6.51 billion. On a constant-currency basis, fiscal third-quarter sales increased 3.4% year over year. The top line also beat the Zacks Consensus Estimate of $6.27 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 Americas and the EMEA bolstered revenues in the reported quarter.

Quarter Details

The Electronic Components segment’s revenues were up 0.7% year over year to $6.06 billion on stellar growth across all regions.

However, the Farnell segment’s revenues declined 3% to $455 million. The segment’s revenues continue to be negatively impacted by supply constraints and pricing.

Revenues from America increased 5.4% year over year, while the EMEA registered sales growth of 9.5%. However, sales from the Asia region plunged 10.1% year over year.

Avnet reported a gross profit of $811.8 million, down from the year-ago quarter’s gross profit of $813 million. The gross margin remained flat on a year-over-year basis at 12.5%.

The adjusted operating income came in at $314.5 million, rising 3.5% year over year. The adjusted operating margin came in at 4.8%, up 15 bps.

Balance Sheet and Cash Flow

As of Apr 1, 2023, AVT had cash and cash equivalents of $185.9 million compared with the $324.8 million reported at the end of the previous quarter.

The long-term debt was $3.03 billion as of Apr 1, up from the $3 billion reported in the prior quarter. Avnet generated operating cash flow of $18 million in the third quarter while using cash worth $948.2 million for operational activities in the first nine months of fiscal 2023.

The company repurchased shares worth $221.3 million and returned $79.8 million to shareholders through dividend payouts in the first nine months of fiscal 2023.

Fourth-Quarter Fiscal 2023 Guidance

Avnet estimates fourth-quarter fiscal 2023 revenues in the range of $6.10-$6.40 billion (midpoint $6.25 billion). Non-GAAP earnings for the current quarter are anticipated in the range of $1.60-$1.70 per share (midpoint $1.65).

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 25.06% due to these changes.

VGM Scores

Currently, Avnet has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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. Notably, Avnet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.