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Avnet's (AVT) Q2 Earnings and Revenues Surpass Estimates
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Avnet (AVT - Free Report) reported better-than-expected second-quarter fiscal 2024 results. The company’s non-GAAP earnings were $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.39. However, the reported figure came 30% lower than the year-ago quarter’s non-GAAP earnings of $2 per share, mainly due to lower revenues and the negative impact of 12 cents from higher interest expenses.
Revenues declined 7.6% year over year to $6.20 billion but slightly came ahead of the Zacks Consensus Estimate of $6.15 billion. The company’s top-line performance reflects a negative impact of weakened demand amid uncertain economic conditions and inventory correction measures adopted by customers.
During the second quarter, Avnet witnessed mixed demand across the diverse end markets it serves. The company pointed out that the defense and transportation markets continued to show relative strength, while demand in the industrial, consumer and communications verticals was relatively soft.
The Electronic Components segment’s revenues were down 8% year over year to $5.81 billion as inventory levels for certain components still remain elevated, which is delaying inventory replenishment requirements. Our estimates for the Electronic Components segment’s revenues were pegged at $5.74 billion.
The Farnell segment’s revenues decreased 4% to $393 million. Our estimates for the Farnell segment’s revenues were pegged at $409.2 million. The decrease in the Farnell segment was mainly due to softness in demand along with the negative impact of the product mix and competitive pricing pressure.
Avnet reported a sales decline across all geographical regions. Revenues from America, Asia and the EMEA fell 6%, 10% and 6% year over year, respectively.
Avnet reported a gross profit of $706.2 million, down from the year-ago quarter’s gross profit of $784.1 million. The gross margin contracted 29 basis points (bps) year over year to 11.4%, primarily due to the lower gross margin at Farnell. Farnell’s gross margin declined due to the negative impacts of an unfavorable sales mix and competitive pricing pressures. Electronic Components’ gross margin was flat on a year-over-year basis.
The adjusted operating income came in at $242 million, which decreased 19% year over year. Adjusted operating income for the Electronic Components segment declined 16% to $248 million, while that for Farnell’s plunged 57% to $16 million. Avnet’s adjusted operating margin shrink 57 bps to 3.9%. Electronic Components’ adjusted operating margin contracted 43 bps to 4.3%, while Farnell’s declined 504 bps to 4%.
Balance Sheet and Cash Flow
As of Dec 30, 2023, AVT had cash and cash equivalents of $272.9 million compared with $278.7 million reported at the end of the previous quarter.
The long-term debt was $2.75 billion as of Dec 30, down from $3.10 billion reported in the prior quarter. Avnet used cash worth $42 million for operational activities during the second quarter of 2024. In the first six months of fiscal 2024, it used cash worth $83.6 million for operational activities.
The company repurchased shares worth $59 million and paid $28 million in dividend payments to shareholders during the second quarter. In the first half of fiscal 2024, it repurchased shares worth $86 million and $56.1 million, respectively.
Third-Quarter Fiscal 2024 Guidance
Avnet estimates third-quarter fiscal 2024 revenues in the range of $5.55-$5.85 billion (midpoint $5.70 billion). Non-GAAP earnings for the current quarter are anticipated in the range of $1.05-$1.15 per share (midpoint $1.10). The Zacks Consensus Estimate for third-quarter revenues and adjusted earnings is pegged at $5.88 billion and $1.33 per share, respectively.
Zacks Rank & Stocks to Consider
Avnet currently carries a Zacks Rank #4 (Sell). Shares of AVT have declined 3.4% over the past year.
The Zacks Consensus Estimate for Zoom’s fiscal 2024 earnings has been revised upward by 3 cents to $4.94 per share in the past 60 days, suggesting year-over-year growth of 13%. The long-term estimated earnings growth rate for the stock stands at 33.5%. Shares of ZM have declined 17.2% over the past year.
The Zacks Consensus Estimate for Amazon’s 2023 earnings has been revised upward by 2 cents to $2.71 per share in the past seven days, which calls for an increase of 281.7% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 28.5%. AMZN stock has returned 47.7% over the past year.
The consensus mark for NVIDIA’s fiscal 2024 earnings has been revised upward by a penny to $12.30 per share over the past 30 days, indicating a whopping 268.3% increase from fiscal 2023. It has a long-term earnings growth expectation of 13.5%. In the trailing 12 months, NVDA stock has surged 193.9%.
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Avnet's (AVT) Q2 Earnings and Revenues Surpass Estimates
Avnet (AVT - Free Report) reported better-than-expected second-quarter fiscal 2024 results. The company’s non-GAAP earnings were $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.39. However, the reported figure came 30% lower than the year-ago quarter’s non-GAAP earnings of $2 per share, mainly due to lower revenues and the negative impact of 12 cents from higher interest expenses.
Revenues declined 7.6% year over year to $6.20 billion but slightly came ahead of the Zacks Consensus Estimate of $6.15 billion. The company’s top-line performance reflects a negative impact of weakened demand amid uncertain economic conditions and inventory correction measures adopted by customers.
During the second quarter, Avnet witnessed mixed demand across the diverse end markets it serves. The company pointed out that the defense and transportation markets continued to show relative strength, while demand in the industrial, consumer and communications verticals was relatively soft.
Avnet, Inc. Price, Consensus and EPS Surprise
Avnet, Inc. price-consensus-eps-surprise-chart | Avnet, Inc. Quote
Quarterly Details
The Electronic Components segment’s revenues were down 8% year over year to $5.81 billion as inventory levels for certain components still remain elevated, which is delaying inventory replenishment requirements. Our estimates for the Electronic Components segment’s revenues were pegged at $5.74 billion.
The Farnell segment’s revenues decreased 4% to $393 million. Our estimates for the Farnell segment’s revenues were pegged at $409.2 million. The decrease in the Farnell segment was mainly due to softness in demand along with the negative impact of the product mix and competitive pricing pressure.
Avnet reported a sales decline across all geographical regions. Revenues from America, Asia and the EMEA fell 6%, 10% and 6% year over year, respectively.
Avnet reported a gross profit of $706.2 million, down from the year-ago quarter’s gross profit of $784.1 million. The gross margin contracted 29 basis points (bps) year over year to 11.4%, primarily due to the lower gross margin at Farnell. Farnell’s gross margin declined due to the negative impacts of an unfavorable sales mix and competitive pricing pressures. Electronic Components’ gross margin was flat on a year-over-year basis.
The adjusted operating income came in at $242 million, which decreased 19% year over year. Adjusted operating income for the Electronic Components segment declined 16% to $248 million, while that for Farnell’s plunged 57% to $16 million. Avnet’s adjusted operating margin shrink 57 bps to 3.9%. Electronic Components’ adjusted operating margin contracted 43 bps to 4.3%, while Farnell’s declined 504 bps to 4%.
Balance Sheet and Cash Flow
As of Dec 30, 2023, AVT had cash and cash equivalents of $272.9 million compared with $278.7 million reported at the end of the previous quarter.
The long-term debt was $2.75 billion as of Dec 30, down from $3.10 billion reported in the prior quarter. Avnet used cash worth $42 million for operational activities during the second quarter of 2024. In the first six months of fiscal 2024, it used cash worth $83.6 million for operational activities.
The company repurchased shares worth $59 million and paid $28 million in dividend payments to shareholders during the second quarter. In the first half of fiscal 2024, it repurchased shares worth $86 million and $56.1 million, respectively.
Third-Quarter Fiscal 2024 Guidance
Avnet estimates third-quarter fiscal 2024 revenues in the range of $5.55-$5.85 billion (midpoint $5.70 billion). Non-GAAP earnings for the current quarter are anticipated in the range of $1.05-$1.15 per share (midpoint $1.10). The Zacks Consensus Estimate for third-quarter revenues and adjusted earnings is pegged at $5.88 billion and $1.33 per share, respectively.
Zacks Rank & Stocks to Consider
Avnet currently carries a Zacks Rank #4 (Sell). Shares of AVT have declined 3.4% over the past year.
Some better-ranked stocks from the broader technology sector are Zoom Video Communications Inc. (ZM - Free Report) , Amazon.com (AMZN - Free Report) and NVIDIA Corporation (NVDA - Free Report) . Zoom currently sports a Zacks Rank #1 (Strong Buy), while Amazon and NVIDIA each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Zoom’s fiscal 2024 earnings has been revised upward by 3 cents to $4.94 per share in the past 60 days, suggesting year-over-year growth of 13%. The long-term estimated earnings growth rate for the stock stands at 33.5%. Shares of ZM have declined 17.2% over the past year.
The Zacks Consensus Estimate for Amazon’s 2023 earnings has been revised upward by 2 cents to $2.71 per share in the past seven days, which calls for an increase of 281.7% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 28.5%. AMZN stock has returned 47.7% over the past year.
The consensus mark for NVIDIA’s fiscal 2024 earnings has been revised upward by a penny to $12.30 per share over the past 30 days, indicating a whopping 268.3% increase from fiscal 2023. It has a long-term earnings growth expectation of 13.5%. In the trailing 12 months, NVDA stock has surged 193.9%.