Avnet's (AVT) Q1 Earnings and Revenues Surpass Estimates
Avnet AVT reported better-than-expected first-quarter fiscal 2024 results. The company’s non-GAAP earnings were $1.61 per share, which surpassed the Zacks Consensus Estimate of $1.50. However, the reported figure came 39 cents lower than the year-ago quarter’s non-GAAP earnings of $2 per share, mainly due to lower revenues and the negative impact of 21 cents from higher interest expenses.
Revenues declined 6.1% year over year to $6.33 billion but slightly came ahead of the Zacks Consensus Estimate of $6.31 billion. On a constant-currency basis, first-quarter fiscal 2024 sales decreased 7.8% year over year.
In the first quarter of 2024, Avnet faced challenges across its industrial, aerospace and defense verticals that delivered moderate performance. The company is also encountering challenges, including inflationary pressure and high cost of labor & raw materials, due to which it does not foresee a decline in pricing in the near term.
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 6.5% year over year to $5.91 billion as inventory levels for certain components still remain elevated, which are delaying inventory replenishment requirements. Our estimates for the Electronic Components segment’s revenues were pegged at $5.88 billion.
The Farnell segment’s revenues decreased 1.1% to $421.2 million. Our estimates for the Farnell segment’s revenues were pegged at $423.6 million. The decrease in the Farnell segment was mainly due to the negative impact of product mix and competitive pricing pressure.
Revenues from America and Asia fell 6.3% and 16.6% year over year, respectively, while the EMEA registered sales growth of 8.4%.
Avnet reported a gross profit of $748.1 million, down from the year-ago quarter’s gross profit of $768.2 million. The gross margin improved 43 basis points (bps) year over year to 11.8%, primarily driven by increased Electronic Components’ gross margin, offset by lower gross margin at Farnell.
Electronic Components’ gross margin improved year over year due to a greater mix of sales from the Western regions. On the other hand, Farnell’s gross margin declined due to the negative impacts of unfavorable sales mix and competitive pricing pressures.
The adjusted operating income came in at $261.7 million, which decreased 10.8% year over year. The adjusted operating margin came in at 4.1%, down 22 bps.
Balance Sheet and Cash Flow
As of Sep 30, 2023, AVT had cash and cash equivalents of $278.7 million compared with $288.2 million reported at the end of the previous quarter.
The long-term debt was $3.10 billion as of Sep 30, up from $2.99 billion reported in the prior quarter. Avnet used cash worth $41.3 million for operational activities during the first quarter of 2024.
The company repurchased shares worth $24.3 million and paid $28.3 million in dividend payments to shareholders during the first quarter.
Second-Quarter Fiscal 2024 Guidance
Avnet estimates second-quarter fiscal 2024 revenues in the range of $6-$6.30 billion (midpoint $6.15 billion). Non-GAAP earnings for the current quarter are anticipated in the range of $1.35-$1.45 per share (midpoint $1.40). The Zacks Consensus Estimate for second-quarter revenues and adjusted earnings is pegged at $6.05 billion and $1.31 per share, respectively.
Zacks Rank and Stocks to Consider
Currently, AVT carries a Zacks Rank #3 (Hold). Shares of the company have returned 11% year to date.
Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, NetEase NTES and Dell Technologies DELL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVDA’s third-quarter fiscal 2024 earnings has been revised by a penny northward to $2.10 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 7 cents to $10.74 in the past 30 days.
NVIDIA's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 9.8%. Shares of NVDA have rallied 189.6% year to date.
The Zacks Consensus Estimate for NetEase's third-quarter 2024 earnings has been revised downward by a penny to $1.56 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 35 cents to $6.54 per share in the past 90 days.
NTES' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 24.54%. Shares of NTES have gained 49.2% year to date.
The Zacks Consensus Estimate for DELL's third-quarter 2024 earnings has been revised downward by 2 cents to $1.10 per share in the past 7 days. For fiscal 2024, earnings estimates have increased by 3 cents to $6.33 per share in the past 30 days.
Dell’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 39.52%. Shares of DELL have climbed 70.7% year to date.
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