It has been about a month since the last earnings report for Avnet (AVT Quick QuoteAVT - Free Report) . Shares have lost about 6.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Avnet due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Avnet, Inc. before we dive into how investors and analysts have reacted as of late.

Avnet Q4 Earnings Beat on Broad-Based Demand and Margin Gains

Avnet reported fourth-quarter fiscal 2026 adjusted earnings of $2.28 per share, beating the Zacks Consensus Estimate of $1.76 by 29.55%. The bottom line surged 181.5% year over year.

Revenues increased 47.7% year over year to $8.30 billion and surpassed the consensus mark of $7.46 billion by 11.28%. Broad-based regional and end-market demand supported the performance, while inventory days improved to 71 from 77 in the preceding quarter.

AVT Posts Record Sales Across Operating Groups

Electronic Components revenues climbed 49% year over year and 17% sequentially to a record $7.80 billion. The segment benefited from improving demand across regions, stronger customer ordering patterns and healthy demand-creation activity.

Farnell revenues rose 29.4% year over year and 10% sequentially to a record $500.1 million. Management highlighted improving demand, execution against Farnell’s strategy and increased use of its digital platform within Avnet’s broader supplier and customer relationships.

Avnet Sees Growth Across Regions and Markets

Americas revenues jumped 55.3% year over year and 27.6% sequentially to $2.06 billion. Growth was diversified across end markets, with aerospace and defense, industrial, communications and transportation contributing to the regional improvement.

EMEA revenues rose 43.7% year over year to $2.30 billion, while Asia revenues advanced 46.3% to $3.94 billion. Asia represented 47% of total sales. All end markets delivered double-digit growth both year over year and sequentially, led by data center, networking, aerospace and defense, and industrial demand.

AVT Expands Margins Through Operating Leverage

Gross margin was 10.4%, up 5 basis points sequentially but down 14 basis points year over year. Electronic Components gross margin was stable sequentially, while Farnell’s gross margin improved nearly 400 basis points year over year, primarily due to a better mix of higher-margin on-board components.

Adjusted operating income surged 122.5% year over year and 44.1% sequentially to $317.9 million. Adjusted operating margin expanded 129 basis points year over year and 73 basis points sequentially to 3.8%, reflecting strong operating leverage and disciplined expense management.

Avnet’s Segment Profitability Accelerates

Electronic Components operating income reached $317 million, while operating margin expanded 107 basis points year over year and 54 basis points sequentially to 4.1%. Improvement in the Americas and Europe supported the segment’s third consecutive quarter of margin expansion.

Farnell operating income increased to $45 million, with operating margin expanding 468 basis points year over year and 373 basis points sequentially to 9%. The result marked Farnell’s seventh consecutive quarter of operating margin improvement. Management expects the business to achieve double-digit operating margins before the end of fiscal 2027.

AVT Benefits From Pricing and Tighter Supply

Higher memory pricing accounted for approximately one-third of both sequential and year-over-year sales growth. Management noted that pricing similarly contributed about one-third of gross profit dollar growth, though price increases are generally passed through to customers and do not necessarily lift gross margin percentage.

Lead times continued to extend across semiconductor and interconnect, passive and electromechanical products. Book-to-bill ratios remained well above parity in all regions, while backlog expanded and provided greater visibility into fiscal 2027. Management said the recovery had broadened beyond artificial intelligence and data center demand into industrial, automation and edge-computing applications.

Avnet Improves Working Capital Efficiency

Working capital days declined seven days sequentially to 69, while return on working capital reached 19%, exceeding management’s near-term target of 16%. Inventory totaled $6.07 billion, up $607 million sequentially, with more than half of the increase tied to pricing, primarily in memory.

AVT used $291 million in operating cash during the quarter to support $1.2 billion of sequential sales growth. Gross leverage improved to 3.2X from 3.6X in the prior quarter, and the company ended the period with $1.2 billion of available committed borrowing capacity. It returned $29 million to shareholders through dividends.

Avnet ended fiscal 2026 with cash and cash equivalents of $155.4 million and long-term debt of $2.48 billion.

AVT Guides for Strong Fiscal 2027 Start

For the first quarter of fiscal 2027, Avnet expects revenues between $9 billion and $9.30 billion. The midpoint of $9.15 billion implies approximately 10% sequential growth, with sales increases anticipated across all Electronic Components regions and Farnell.

Adjusted earnings are projected between $2.80 and $2.90 per share. The outlook assumes interest expense similar to the fourth quarter, an adjusted effective tax rate between 21% and 25%, and approximately 85 million diluted shares outstanding.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 72.49% due to these changes.

VGM Scores

Currently, Avnet has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for value investors.

Overall, the stock has an aggregate VGM Score of D. 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.