Is Avnet (AVT) Likely to Surprise Q2 Earnings Estimates? - Analyst Blog
The global technology distributor, Avnet Inc. (AVT) is scheduled to report the second-quarter fiscal 2015 results on Jan 22. Last quarter, the company posted a positive earnings surprise of 5.2%. Let us see how things are shaping up for this announcement.
Factors to Consider
Avnet posted better-than-expected first-quarter fiscal 2015 results. The guidance, however, was less than encouraging due to tepid IT spending environment.
We, however, remain 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 the 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.
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: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.20. Hence, the difference is 0.00%.
Zacks Rank: Avnet’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise predictions difficult.
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 momentum.
Stocks to Consider
Here are some companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Facebook Inc. (FB), with an Earnings ESP of +12.12% and a Zacks Rank #1 (Strong Buy).
Apple Inc. (AAPL), with an Earnings ESP of +0.78% and a Zacks Rank #2 (Buy).
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