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Avnet (AVT) Soars 7% as Q4 Earnings and Revenues Beat Estimates
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Avnet (AVT - Free Report) shares gained nearly 7% on Thursday after the company reported better-than-expected fourth-quarter fiscal 2024 results. Its non-GAAP earnings were $1.22 per share, which came way above the Zacks Consensus Estimate of 95 cents as well as management’s guidance range of 90 cents-$1.00.
However, the reported figure came 41% lower than the year-ago quarter’s non-GAAP earnings of $2.06 per share, mainly due to lower revenues.
Revenues declined 15% year over year to $5.56 billion but came above the Zacks Consensus Estimate of $5.36 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 fourth quarter, Avnet witnessed mixed demand across the diverse end markets it serves. The company pointed out that demand declined across most of the end markets it operates in. However, the aerospace and defense end markets showed improvements.
The Electronic Components segment’s revenues were down 15% year over year to $5.19 billion. Our estimates for the Electronic Components segment’s revenues were pegged at $4.99 billion.
The Farnell segment’s revenues decreased 16% to $375 million. Our estimates for the Farnell segment’s revenues were pegged at $371.4 million.
Avnet reported a year-over-year sales decline across all geographical regions. Revenues from America, Asia and the EMEA fell 22%, 4% and 22%, respectively.
Avnet reported a gross profit of $642.9 million, down from the year-ago quarter’s gross profit of $818 million. The gross margin contracted 92 basis points (bps) year over year to 11.6%, primarily due to the lower gross margin in the Electronic Components and Farnell segments.
Electronic Components’ gross margin was down year over year, primarily due to a lower mix of sales from the Western regions. Farnell’s gross margin declined due to continued weak market demand for on-the-board components.
The adjusted operating income came in at $193 million, which decreased 38% year over year. The adjusted operating income for the Electronic Components segment declined 32% to $210 million, while that for Farnell’s plunged 58% to $15 million. Avnet’s adjusted operating margin shrank 129 bps to 3.5%. Electronic Components’ adjusted operating margin contracted 103 bps to 4.1%, while Farnell’s declined 406 bps to 4%.
Balance Sheet and Cash Flow
As of Jun 29, 2024, AVT had cash and cash equivalents of $310.9 million compared with $218.5 million reported at the end of the previous quarter.
The long-term debt was $2.41 billion as of Jun 29, flat compared with the previous quarter. Avnet generated nearly $274 million of cash from operational activities during the fourth quarter of 2024. In fiscal 2024, it generated cash worth $690 million from operational activities.
The company returned $107 million to shareholders through paying $28 million in dividends and repurchasing shares worth $79 million. In fiscal 2024, it repurchased shares worth $165 million and paid $112 million in dividends.
First-Quarter Fiscal 2025 Guidance
Avnet estimates first-quarter fiscal 2025 revenues in the range of $5.25-$5.55 billion (midpoint $5.40 billion). Non-GAAP earnings for the current quarter are anticipated between 80 cents and 90 cents per share (midpoint 85 cents). The Zacks Consensus Estimate for first-quarter revenues and adjusted earnings is pegged at $5.51 billion and $1.00 per share, respectively.
Zacks Rank & Stocks to Consider
Avnet currently carries a Zacks Rank #4 (Sell). Shares of AVT have gained 5.9% year-to-date (YTD).
The Zacks Consensus Estimate for Arista Networks’ 2024 earnings has been revised upward by 4% to $8.24 per share in the past 30 days, which suggests year-over-year growth of 18.7%. The long-term estimated earnings growth rate for the stock is 17.2%. The stock has rallied 42% YTD.
The consensus mark for Twilio’s 2024 earnings has been revised upward by 10 cents to $3.22 per share over the past seven days, which indicates a 31.4% increase from 2023. It has a long-term earnings growth expectation of 32.7%. The stock has plunged 20.1% YTD.
The Zacks Consensus Estimate for Datadog’s 2024 earnings has remained unchanged at $1.54 in the past 60 days, which calls for an increase of 16.7% on a year-over-year basis. The long-term estimated earnings growth rate for the stock is 9.6%. Shares of DDOG have declined 6% YTD.
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Avnet (AVT) Soars 7% as Q4 Earnings and Revenues Beat Estimates
Avnet (AVT - Free Report) shares gained nearly 7% on Thursday after the company reported better-than-expected fourth-quarter fiscal 2024 results. Its non-GAAP earnings were $1.22 per share, which came way above the Zacks Consensus Estimate of 95 cents as well as management’s guidance range of 90 cents-$1.00.
However, the reported figure came 41% lower than the year-ago quarter’s non-GAAP earnings of $2.06 per share, mainly due to lower revenues.
Revenues declined 15% year over year to $5.56 billion but came above the Zacks Consensus Estimate of $5.36 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 fourth quarter, Avnet witnessed mixed demand across the diverse end markets it serves. The company pointed out that demand declined across most of the end markets it operates in. However, the aerospace and defense end markets showed improvements.
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 15% year over year to $5.19 billion. Our estimates for the Electronic Components segment’s revenues were pegged at $4.99 billion.
The Farnell segment’s revenues decreased 16% to $375 million. Our estimates for the Farnell segment’s revenues were pegged at $371.4 million.
Avnet reported a year-over-year sales decline across all geographical regions. Revenues from America, Asia and the EMEA fell 22%, 4% and 22%, respectively.
Avnet reported a gross profit of $642.9 million, down from the year-ago quarter’s gross profit of $818 million. The gross margin contracted 92 basis points (bps) year over year to 11.6%, primarily due to the lower gross margin in the Electronic Components and Farnell segments.
Electronic Components’ gross margin was down year over year, primarily due to a lower mix of sales from the Western regions. Farnell’s gross margin declined due to continued weak market demand for on-the-board components.
The adjusted operating income came in at $193 million, which decreased 38% year over year. The adjusted operating income for the Electronic Components segment declined 32% to $210 million, while that for Farnell’s plunged 58% to $15 million. Avnet’s adjusted operating margin shrank 129 bps to 3.5%. Electronic Components’ adjusted operating margin contracted 103 bps to 4.1%, while Farnell’s declined 406 bps to 4%.
Balance Sheet and Cash Flow
As of Jun 29, 2024, AVT had cash and cash equivalents of $310.9 million compared with $218.5 million reported at the end of the previous quarter.
The long-term debt was $2.41 billion as of Jun 29, flat compared with the previous quarter. Avnet generated nearly $274 million of cash from operational activities during the fourth quarter of 2024. In fiscal 2024, it generated cash worth $690 million from operational activities.
The company returned $107 million to shareholders through paying $28 million in dividends and repurchasing shares worth $79 million. In fiscal 2024, it repurchased shares worth $165 million and paid $112 million in dividends.
First-Quarter Fiscal 2025 Guidance
Avnet estimates first-quarter fiscal 2025 revenues in the range of $5.25-$5.55 billion (midpoint $5.40 billion). Non-GAAP earnings for the current quarter are anticipated between 80 cents and 90 cents per share (midpoint 85 cents). The Zacks Consensus Estimate for first-quarter revenues and adjusted earnings is pegged at $5.51 billion and $1.00 per share, respectively.
Zacks Rank & Stocks to Consider
Avnet currently carries a Zacks Rank #4 (Sell). Shares of AVT have gained 5.9% year-to-date (YTD).
Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Twilio (TWLO - Free Report) and Datadog (DDOG - Free Report) While Arista Networks sports a Zacks Rank #1 (Strong Buy), Twilio and Datadog each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2024 earnings has been revised upward by 4% to $8.24 per share in the past 30 days, which suggests year-over-year growth of 18.7%. The long-term estimated earnings growth rate for the stock is 17.2%. The stock has rallied 42% YTD.
The consensus mark for Twilio’s 2024 earnings has been revised upward by 10 cents to $3.22 per share over the past seven days, which indicates a 31.4% increase from 2023. It has a long-term earnings growth expectation of 32.7%. The stock has plunged 20.1% YTD.
The Zacks Consensus Estimate for Datadog’s 2024 earnings has remained unchanged at $1.54 in the past 60 days, which calls for an increase of 16.7% on a year-over-year basis. The long-term estimated earnings growth rate for the stock is 9.6%. Shares of DDOG have declined 6% YTD.