Will Avnet (AVT) Disappoint Earnings Estimates in Q3? - Analyst Blog
The global technology distributor, Avnet Inc. AVT is scheduled to report third-quarter fiscal 2015 results on Apr 23. Last quarter, the company posted a positive earnings surprise of 5.83%. Let's see how things are shaping up for this announcement.
Factors to Consider
Avnet posted better-than-expected second-quarter fiscal 2015 results. The guidance, however, was less than encouraging due to the tepid IT spending environment.
Nevertheless, we are encouraged by the company’s strategy of growing through acquisitions, which not only boost product portfolio but also strengthen the revenue streams. Moreover, management’s decision to optimize costs and investments to tap changing demand are the positives.
Nonetheless, a significant portion of Avnet’s revenues comes from the sale of semiconductors, which is a cyclical industry characterized by changes in technology and manufacturing capacity and subject to significant market fluctuations. Furthermore, competition from Arrow Electronics Inc. ARW and Ingram Micro remains a headwind in the third quarter.
Earnings Whispers
Our proven model does not conclusively show that Avnet will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Avnet’s Earnings ESP is -3.67% as the Most Accurate estimate of $1.05 is pegged lower than the Zacks Consensus Estimate of $1.09.
Zacks Rank: Avnet’s Zacks Rank #4 (Sell).
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies which you may consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Apple Inc. AAPL, with an Earnings ESP of +1.38% and a Zacks Rank #2 (Buy).
Amazon.com Inc. AMZN, with an Earnings ESP of +69.23% and a Zacks Rank #3 (Hold).
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