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Avnet (AVT) Down 2.9% Since Earnings Report: Can It Rebound?
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It has been more than a month since the last earnings report for Avnet, Inc. (AVT - Free Report) . Shares have lost about 2.9% in that time frame.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
Avnet Q1 Earnings & Revenues Beat, FY18 Guidance Up
Avnet reported first-quarter fiscal 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The company reported fiscal first-quarter adjusted earnings of 76 cents per share, beating the Zacks Consensus Estimate of 71 cents and also marked improvement from the year-ago quarter by a couple of cents.
The adjusted figure excludes restructuring, integration and other charges, and amortization of intangible assets. Earnings also came toward the high-end of the company’s previous guidance range of 67-77 cents per share.
Before delving into the financial results, it should be noted that Avnet changed its reportable segments during fourth-quarter fiscal 2017, which comprised the Electronic Components and Premier Farnell operating groups.
The change in reportable segment was done to reflect the company’s actual business post completion of the divesture of Technology Solutions business to Tech Data Corporation, as well as the closure of the much-awaited acquisition of Premier Farnell plc in the fourth-quarter fiscal 2017 as well.
Quarter Details
Avnet’s quarterly revenues of $4.66 billion not only increased 13.2% year over year but also surpassed the Zacks Consensus Estimate of $4.332 billion. Moreover, revenues remained toward the higher end of management’s guidance of $4.15-$4.45 billion.
On a constant currency basis, revenues were up 11.8% year over year, while organic revenues climbed 3.5% from the year-ago quarter. The company’s quarterly revenues mainly benefited from the recently acquired Premier Farnell business and Electronic Components group.
Electronics Components witnessed strong year-over-year growth across the EMEA and Asia regions. Revenues from EMEA surged 33.8%, while the Asia region revenues were up 11.2%. Revenues from the Americas, however, declined 5.2% year over year.
The company reported a year-over-year increase of 17% in gross profit, reaching $613 million. However, gross profit margin contracted 55 basis points (bps) to 13.1% primarily due to supplier channel and program changes.
Adjusted operating income dropped 12% from the year-earlier quarter to $141.9 million, as benefit from the Premier Farnell acquisition, and sound growth across the EMEA and Asia regions were more than offset by a decline in the Americas revenues. Adjusted operating margin came in at 3%, contracting 87 bps from the year-ago quarter, chiefly due to the supplier channel and program changes.
Adjusted net income amounted to $94.8 million compared with $96.6 million reported in the year-ago quarter.
Avnet exited the fiscal first quarter with cash and cash equivalents and marketable securities of $737.6 million compared with $1.118 billion recorded in the previous quarter. Long-term debt was $1.495 billion. During the reported quarter, the company generated $58.2 million of cash from operational activities.
Avnet paid a dividend of 18 cents worth $22 million during the fiscal first quarter. Avnet repurchased 1.9 million shares worth $72.1 million during the quarter and has approximately $327 million remaining under the current share-repurchase authorization program.
Guidance
Buoyed by better-than-expected fiscal first-quarter performance, the company raised its outlook for fiscal 2018. Avnet now expects sales to be in the range of $18.1-$18.5 billion (mid-point $18.3 billion), up from the previous range of $17.3-$17.7 billion (mid-point $17.5 billion).
Adjusted earnings per share are projected to come between $3.10 and $3.60 (mid-point $3.35), up from the prior guidance range of $3-$3.5 per share.
For the second quarter, the company projects sales in the range of $4.25-$4.55 billion (mid-point $4.4 billion).
Adjusted earnings per share are estimated in the range of 67-77 cents. The tax rate is likely to be in the 21-25% band.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
Currently, Avnet's stock has a poor Growth Score of F, while it is doing a lot better on the momentum front with 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for value than momentum based on our styles scores.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Avnet (AVT) Down 2.9% Since Earnings Report: Can It Rebound?
It has been more than a month since the last earnings report for Avnet, Inc. (AVT - Free Report) . Shares have lost about 2.9% in that time frame.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
Avnet Q1 Earnings & Revenues Beat, FY18 Guidance Up
Avnet reported first-quarter fiscal 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. The company reported fiscal first-quarter adjusted earnings of 76 cents per share, beating the Zacks Consensus Estimate of 71 cents and also marked improvement from the year-ago quarter by a couple of cents.
The adjusted figure excludes restructuring, integration and other charges, and amortization of intangible assets. Earnings also came toward the high-end of the company’s previous guidance range of 67-77 cents per share.
Before delving into the financial results, it should be noted that Avnet changed its reportable segments during fourth-quarter fiscal 2017, which comprised the Electronic Components and Premier Farnell operating groups.
The change in reportable segment was done to reflect the company’s actual business post completion of the divesture of Technology Solutions business to Tech Data Corporation, as well as the closure of the much-awaited acquisition of Premier Farnell plc in the fourth-quarter fiscal 2017 as well.
Quarter Details
Avnet’s quarterly revenues of $4.66 billion not only increased 13.2% year over year but also surpassed the Zacks Consensus Estimate of $4.332 billion. Moreover, revenues remained toward the higher end of management’s guidance of $4.15-$4.45 billion.
On a constant currency basis, revenues were up 11.8% year over year, while organic revenues climbed 3.5% from the year-ago quarter. The company’s quarterly revenues mainly benefited from the recently acquired Premier Farnell business and Electronic Components group.
Electronics Components witnessed strong year-over-year growth across the EMEA and Asia regions. Revenues from EMEA surged 33.8%, while the Asia region revenues were up 11.2%. Revenues from the Americas, however, declined 5.2% year over year.
The company reported a year-over-year increase of 17% in gross profit, reaching $613 million. However, gross profit margin contracted 55 basis points (bps) to 13.1% primarily due to supplier channel and program changes.
Adjusted operating income dropped 12% from the year-earlier quarter to $141.9 million, as benefit from the Premier Farnell acquisition, and sound growth across the EMEA and Asia regions were more than offset by a decline in the Americas revenues. Adjusted operating margin came in at 3%, contracting 87 bps from the year-ago quarter, chiefly due to the supplier channel and program changes.
Adjusted net income amounted to $94.8 million compared with $96.6 million reported in the year-ago quarter.
Avnet exited the fiscal first quarter with cash and cash equivalents and marketable securities of $737.6 million compared with $1.118 billion recorded in the previous quarter. Long-term debt was $1.495 billion. During the reported quarter, the company generated $58.2 million of cash from operational activities.
Avnet paid a dividend of 18 cents worth $22 million during the fiscal first quarter. Avnet repurchased 1.9 million shares worth $72.1 million during the quarter and has approximately $327 million remaining under the current share-repurchase authorization program.
Guidance
Buoyed by better-than-expected fiscal first-quarter performance, the company raised its outlook for fiscal 2018. Avnet now expects sales to be in the range of $18.1-$18.5 billion (mid-point $18.3 billion), up from the previous range of $17.3-$17.7 billion (mid-point $17.5 billion).
Adjusted earnings per share are projected to come between $3.10 and $3.60 (mid-point $3.35), up from the prior guidance range of $3-$3.5 per share.
For the second quarter, the company projects sales in the range of $4.25-$4.55 billion (mid-point $4.4 billion).
Adjusted earnings per share are estimated in the range of 67-77 cents. The tax rate is likely to be in the 21-25% band.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
Avnet, Inc. Price and Consensus
Avnet, Inc. Price and Consensus | Avnet, Inc. Quote
VGM Scores
Currently, Avnet's stock has a poor Growth Score of F, while it is doing a lot better on the momentum front with 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for value than momentum based on our styles scores.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.