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Why Is Avnet (AVT) Up 3.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Avnet (AVT - Free Report) . Shares have added about 3.1% 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 its most recent earnings report in order to get a better handle on the important drivers.
Avnet's Q1 Earnings and Revenues Surpass Estimates
Avnet reported better-than-expected first-quarter fiscal 2024 results. The company’s non-GAAP earnings were $1.61 per share, which surpassed the Zacks Consensus Estimate of $1.50. However, the reported figure came 39 cents lower than the year-ago quarter’s non-GAAP earnings of $2 per share, mainly due to lower revenues and the negative impact of 21 cents from higher interest expenses.
Revenues declined 6.1% year over year to $6.33 billion but slightly came ahead of the Zacks Consensus Estimate of $6.31 billion. On a constant-currency basis, first-quarter fiscal 2024 sales decreased 7.8% year over year.
In the first quarter of 2024, Avnet faced challenges across its industrial, aerospace and defense verticals that delivered moderate performance. The company is also encountering challenges, including inflationary pressure and high cost of labor & raw materials, due to which it does not foresee a decline in pricing in the near term.
Quarterly Details
The Electronic Components segment’s revenues were down 6.5% year over year to $5.91 billion as inventory levels for certain components still remain elevated, which are delaying inventory replenishment requirements. Our estimates for the Electronic Components segment’s revenues were pegged at $5.88 billion.
The Farnell segment’s revenues decreased 1.1% to $421.2 million. Our estimates for the Farnell segment’s revenues were pegged at $423.6 million. The decrease in the Farnell segment was mainly due to the negative impact of product mix and competitive pricing pressure.
Revenues from America and Asia fell 6.3% and 16.6% year over year, respectively, while the EMEA registered sales growth of 8.4%.
Avnet reported a gross profit of $748.1 million, down from the year-ago quarter’s gross profit of $768.2 million. The gross margin improved 43 basis points (bps) year over year to 11.8%, primarily driven by increased Electronic Components’ gross margin, offset by lower gross margin at Farnell.
Electronic Components’ gross margin improved year over year due to a greater mix of sales from the Western regions. On the other hand, Farnell’s gross margin declined due to the negative impacts of unfavorable sales mix and competitive pricing pressures.
The adjusted operating income came in at $261.7 million, which decreased 10.8% year over year. The adjusted operating margin came in at 4.1%, down 22 bps.
Balance Sheet and Cash Flow
As of Sep 30, 2023, AVT had cash and cash equivalents of $278.7 million compared with $288.2 million reported at the end of the previous quarter.
The long-term debt was $3.10 billion as of Sep 30, up from $2.99 billion reported in the prior quarter. Avnet used cash worth $41.3 million for operational activities during the first quarter of 2024.
The company repurchased shares worth $24.3 million and paid $28.3 million in dividend payments to shareholders during the first quarter.
Second-Quarter Fiscal 2024 Guidance
Avnet estimates second-quarter fiscal 2024 revenues in the range of $6-$6.30 billion (midpoint $6.15 billion). Non-GAAP earnings for the current quarter are anticipated in the range of $1.35-$1.45 per share (midpoint $1.40).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 6.29% due to these changes.
VGM Scores
Currently, Avnet has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, 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. Notably, Avnet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Avnet (AVT) Up 3.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Avnet (AVT - Free Report) . Shares have added about 3.1% 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 its most recent earnings report in order to get a better handle on the important drivers.
Avnet's Q1 Earnings and Revenues Surpass Estimates
Avnet reported better-than-expected first-quarter fiscal 2024 results. The company’s non-GAAP earnings were $1.61 per share, which surpassed the Zacks Consensus Estimate of $1.50. However, the reported figure came 39 cents lower than the year-ago quarter’s non-GAAP earnings of $2 per share, mainly due to lower revenues and the negative impact of 21 cents from higher interest expenses.
Revenues declined 6.1% year over year to $6.33 billion but slightly came ahead of the Zacks Consensus Estimate of $6.31 billion. On a constant-currency basis, first-quarter fiscal 2024 sales decreased 7.8% year over year.
In the first quarter of 2024, Avnet faced challenges across its industrial, aerospace and defense verticals that delivered moderate performance. The company is also encountering challenges, including inflationary pressure and high cost of labor & raw materials, due to which it does not foresee a decline in pricing in the near term.
Quarterly Details
The Electronic Components segment’s revenues were down 6.5% year over year to $5.91 billion as inventory levels for certain components still remain elevated, which are delaying inventory replenishment requirements. Our estimates for the Electronic Components segment’s revenues were pegged at $5.88 billion.
The Farnell segment’s revenues decreased 1.1% to $421.2 million. Our estimates for the Farnell segment’s revenues were pegged at $423.6 million. The decrease in the Farnell segment was mainly due to the negative impact of product mix and competitive pricing pressure.
Revenues from America and Asia fell 6.3% and 16.6% year over year, respectively, while the EMEA registered sales growth of 8.4%.
Avnet reported a gross profit of $748.1 million, down from the year-ago quarter’s gross profit of $768.2 million. The gross margin improved 43 basis points (bps) year over year to 11.8%, primarily driven by increased Electronic Components’ gross margin, offset by lower gross margin at Farnell.
Electronic Components’ gross margin improved year over year due to a greater mix of sales from the Western regions. On the other hand, Farnell’s gross margin declined due to the negative impacts of unfavorable sales mix and competitive pricing pressures.
The adjusted operating income came in at $261.7 million, which decreased 10.8% year over year. The adjusted operating margin came in at 4.1%, down 22 bps.
Balance Sheet and Cash Flow
As of Sep 30, 2023, AVT had cash and cash equivalents of $278.7 million compared with $288.2 million reported at the end of the previous quarter.
The long-term debt was $3.10 billion as of Sep 30, up from $2.99 billion reported in the prior quarter. Avnet used cash worth $41.3 million for operational activities during the first quarter of 2024.
The company repurchased shares worth $24.3 million and paid $28.3 million in dividend payments to shareholders during the first quarter.
Second-Quarter Fiscal 2024 Guidance
Avnet estimates second-quarter fiscal 2024 revenues in the range of $6-$6.30 billion (midpoint $6.15 billion). Non-GAAP earnings for the current quarter are anticipated in the range of $1.35-$1.45 per share (midpoint $1.40).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 6.29% due to these changes.
VGM Scores
Currently, Avnet has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, 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. Notably, Avnet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.