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Avnet (AVT) Down 2.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Avnet (AVT). Shares have lost about 2.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Avnet due for a breakout? 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 Beats on Earnings & Revenue Estimates in Q4

Avnet reported better-than-anticipated fourth-quarter fiscal 2022 results and provided impressive guidance for the first quarter of fiscal 2023.

The company’s fiscal fourth-quarter non-GAAP earnings were $2.07 per share, which surpassed the Zacks Consensus Estimate of $1.96. The reported figure jumped a whopping 84.8% year over year.

Revenues climbed 21.9% year over year to $6.37 billion. On a constant-currency basis, fiscal fourth-quarter sales increased 28.2% year over year. The top line beat the Zacks Consensus Estimate of $6.2 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, the EMEA and Asia bolstered revenues in the reported quarter.

Quarter in Detail

Electronic Components segment’s revenues were up 23.9% year over year to $5.93 billion on stellar growth across all regions.

The Farnell segment’s revenues inched up 0.2% to $442.3 million.

Revenues from America increased 35.5% year over year. Sales from the EMEA and Asia regions jumped 18.8% and 17.2% year over year, respectively.

Avnet reported a gross profit of $779.6 million, up 20.9% year over year. The gross margin contracted 10 basis points (bps) to 12.2%.

The adjusted operating income came in at $287.6 million, soaring 89.4% year over year. The adjusted operating margin came in at 4.5%, up 160 bps.

Balance Sheet and Cash Flow

As of Jul 2, 2022, AVT had cash and cash equivalents of $153.7 million compared with the $199.5 million reported at the end of the previous quarter.

The long-term debt was $1.44 billion as of Jul 2, up from the $922 million reported in the prior quarter. During fiscal 2022, Avnet used cash worth $219.3 million for operational activities.

First-Quarter Fiscal 2023 Guidance

Avnet estimates first-quarter fiscal 2023 revenues in the range of $6.2 billion-$6.5 billion (midpoint $6.35 billion). Non-GAAP earnings for the current quarter are anticipated in the range of $1.85-$1.95 per share (midpoint $1.90).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, Avnet has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Avnet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Avnet is part of the Zacks Electronics - Parts Distribution industry. Over the past month, Wesco International (WCC), a stock from the same industry, has gained 0.7%. The company reported its results for the quarter ended June 2022 more than a month ago.

Wesco International reported revenues of $5.48 billion in the last reported quarter, representing a year-over-year change of +19.3%. EPS of $4.19 for the same period compares with $2.64 a year ago.

Wesco International is expected to post earnings of $4.37 per share for the current quarter, representing a year-over-year change of +59.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.2%.

Wesco International has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.


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