Avnet (AVT) Gains 8% on Q2 Earnings Beat, Strong Q3 Guidance

Avnet’s AVT shares rallied 7.6% in Wednesday’s extended trading session following the electronics component distributor’s report of better-than-expected second-quarter fiscal 2022 results and impressive guidance for the third quarter.

Avnet reported fiscal second-quarter non-GAAP earnings of $1.51 per share, which surpassed the Zacks Consensus Estimate of $1.25. The reported figure also jumped a whopping 215% year over year and 23.8% sequentially.

Revenues climbed 25.6% year over year and 5% sequentially to $5.87 billion. On a constant currency basis, fiscal second-quarter sales increased 27.4% year over year and 6.1% quarter over quarter. The top line also surpassed the Zacks Consensus Estimate of $5.52 billion.

Avnet’s quarterly results benefited from a strong demand environment for its products as well as the company’s continued investments in e-commerce and expanding customer relationships. Robust sales in the EMEA boosted revenues in the reported quarter. An improvement in America also served as a tailwind.

Avnet, Inc. Price and EPS Surprise

Avnet, Inc. price-eps-surprise | Avnet, Inc. Quote

Quarter in Detail

The Electronic Components segment’s revenues were up 24.9% year over year to $5.42 billion on stellar growth across all regions.

The Farnell segment’s revenues of $440.9 million climbed 35.3% year over year.

Revenues from America increased 26.3% year over year. Sales from the EMEA and Asia regions jumped 36.7% and 18.6% year over year, respectively.

Avnet reported gross profit of $713 million, up 39.4% year over year. Gross margin expanded 120 basis points (bps) to 12.2%.

Adjusted operating income came in at $215.5 million, soaring 170.7% year over year. Adjusted operating margin came in at 3.7%, up 197 bps.

Balance Sheet and Cash Flow

As of Jan 1, 2022, Avnet had cash and cash equivalents of $167.8 million compared with $299.1 million recorded at the end of the previous quarter.

Long-term debt was $1.14 billion as of Jan 1, up from $1.39 billion reported in the prior quarter.

The net debt leverage ratio was 1.7 at the end of the fiscal second quarter.

Q2 Fiscal 2022 Guidance

Avnet estimates fiscal third-quarter revenues in the range of $5.4-$5.8 billion (midpoint $5.6 billion), which is higher than the Zacks Consensus Estimate of $5.5 billion at the midpoint. Non-GAAP earnings for the current quarter are anticipated in the range of $1.45-$1.55 per share (midpoint $1.50), higher than the consensus mark of $1.20.

Zacks Rank & Stocks to Consider

Avnet currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector include Broadcom AVGO, Advanced Micro Devices AMD and Jabil JBL. While Broadcom sports a Zacks Rank #1 (Strong Buy), Advanced Micro Devices and Jabil 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 Broadcom’s first-quarter fiscal 2022 earnings has been revised upward by 8.1% to $8.15 per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 6.5% to $33.03 per share over the past 60 days.

Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.4%. Shares of AVGO have rallied 23.3% in the trailing 12 months.

The Zacks Consensus Estimate for Advanced Micro Devices’ first-quarter 2022 earnings has been revised upward by a penny to 68 cents per share over the past 30 days. For 2022, earnings estimates have moved upward by a penny to $3.32 per share in the past seven days.

Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 14%. AMD stock has rallied 26.5% over the past year.

The Zacks Consensus Estimate for Jabil’s second-quarter fiscal 2022 earnings has been revised upward to $1.47 per share from $1.41 60 days ago. For fiscal 2022, earnings estimates have been revised upward by 25 cents to $6.58 per share in the past 60 days.

Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 18.1%. Shares of JBL have rallied 38.7% over the past year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

Avnet, Inc. (AVT) : Free Stock Analysis Report

Jabil, Inc. (JBL) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

To read this article on Zacks.com click here.