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Avnet (AVT)
NASDAQ:AVT
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Avnet
(NASDAQ:AVT)68Neutral
Positive Factors
Financial Performance
AVT delivered F1Q revenue of $5.6 billion, above the high end of its guidance range and versus Street at $5.4 billion, and an EPS of $0.92 which was also above the high end of guidance and versus Street at $0.86.
Leadership and Strategy
Avnet remains confident in an eventual return to double-digit EBIT% with new leadership and additional cost optimization plans.
Negative Factors
Inventory and Supply Chain
Negative impact from mix, inventory correction ongoing.
Margins
Farnell's catalog business has much weaker margins than expected, with operating margin at 0.5% versus an expectation for flat at 4.0%.
Market Demand
The demand environment is seen as weak, especially in Europe.
Avnet (AVT) vs. S&P 500 (SPY)
Market Cap
$4.25B
Dividend Yield2.61%
Average Volume (3M)795.90K
Price to Earnings (P/E)13.9
Beta (1Y)0.91
Revenue Growth-12.21%
EPS Growth-51.31%
CountryUS
Employees15,462
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)3.53
Shares Outstanding86,504,560
10 Day Avg. Volume819,973
30 Day Avg. Volume795,902
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.19
Price to Cash Flow (P/CF)3.10
P/FCF Ratio3.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$50.00Price Target Upside1.73% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering3
Avnet Business Overview & Revenue Model
Company DescriptionAvnet, Inc. (AVT) is a global technology solutions company headquartered in Phoenix, Arizona. It operates primarily in the electronic components and technology distribution sectors. Avnet provides a wide range of products and services, including electronic components distribution, technical design support, and supply chain services to a variety of industries such as automotive, industrial, and consumer electronics. The company plays a crucial role in helping manufacturers bring their technological innovations to market efficiently.
How the Company Makes MoneyAvnet makes money through its distribution and sales of electronic components, which form the core of its business model. It sources components from leading technology suppliers and distributes them to a broad customer base ranging from small businesses to large enterprises. Avnet's key revenue streams include the sale of semiconductors, interconnects, passives, and electromechanical devices. Additionally, Avnet offers value-added services such as design chain and supply chain solutions, which help clients optimize their product development and manufacturing processes. Strategic partnerships with major technology companies and a strong global logistics network further contribute to Avnet's revenue streams by enhancing its ability to deliver comprehensive solutions to its customers.
Avnet Financial Statement Overview
Summary
Avnet's financial performance is characterized by stable revenue growth but profitability challenges. The balance sheet shows strength in equity but is burdened by significant debt levels. Cash flow generation has been inconsistent, posing a potential risk to liquidity.Income Statement
Avnet shows a mixed performance on the income statement. The company has demonstrated solid revenue growth over the years, albeit with some fluctuations. The gross profit margin is relatively stable, reflecting effective cost management. However, the net profit margin has been declining, partly due to increasing operational costs. The TTM EBIT margin shows a downward trend, indicating a challenge in maintaining profitability levels.75
Positive
Balance Sheet
The balance sheet reveals a strong equity base with a healthy equity ratio. However, the company carries a significant amount of debt, as indicated by a moderately high debt-to-equity ratio. The return on equity has been under pressure due to declining profitability. Overall, the balance sheet suggests a stable yet leveraged financial position.70
Positive
Cash Flow
Cash flow analysis indicates that Avnet has experienced volatile operating cash flows over the years. The free cash flow growth is positive in the latest period but has shown variability in previous years. The operating cash flow to net income ratio is strong, suggesting good cash conversion, though the free cash flow to net income ratio indicates some challenges in translating profits into free cash.65
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 22.48B | 23.76B | 26.54B | 24.31B | 19.53B | 17.63B | Gross Profit |
| 2.52B | 2.77B | 3.18B | 2.97B | 2.24B | 2.06B | EBIT |
| 692.15M | 896.92M | 1.19B | 939.01M | 281.41M | 220.60M | EBITDA |
| 771.00M | 1.06B | 1.38B | 1.09B | 451.10M | 237.53M | Net Income Common Stockholders |
| 317.71M | 498.70M | 770.83M | 692.38M | 193.11M | -29.53M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 172.14M | 310.94M | 288.23M | 153.69M | 199.69M | 477.04M | Total Assets |
| 11.94B | 12.21B | 12.48B | 10.39B | 8.93B | 8.11B | Total Debt |
| 2.79B | 3.13B | 3.30B | 1.87B | 1.51B | 1.73B | Net Debt |
| 2.62B | 2.82B | 3.01B | 1.71B | 1.31B | 1.25B | Total Liabilities |
| 7.10B | 7.28B | 7.73B | 6.20B | 4.84B | 4.38B | Stockholders Equity |
| 11.94B | 4.93B | 4.75B | 4.19B | 4.08B | 3.73B |
| Cash Flow | Free Cash Flow | ||||
| 1.09B | 463.51M | -908.38M | -268.21M | 40.59M | 656.67M | Operating Cash Flow |
| 1.22B | 689.98M | -713.70M | -219.31M | 90.95M | 730.18M | Investing Cash Flow |
| -128.56M | -225.48M | -211.55M | 51.30M | -61.20M | -135.02M | Financing Cash Flow |
| -1.17B | -433.80M | 1.05B | 156.06M | -314.01M | -644.55M |
Avnet Technical Analysis
Negative
49.15
Price Trends
51.39
Negative
52.62
Negative
52.29
Negative
Market Momentum
-0.64
Positive
39.95
Neutral
14.33
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVT, the sentiment is Negative. The current price of 49.15 is below the 20-day moving average (MA) of 50.33, below the 50-day MA of 51.39, and below the 200-day MA of 52.29, indicating a bearish trend. The MACD of -0.64 indicates Positive momentum. The RSI at 39.95 is Neutral, neither overbought nor oversold. The STOCH value of 14.33 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AVT.
Avnet Risk Analysis
Avnet disclosed 19 risk factors in its most recent earnings report. Avnet reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Avnet Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.22B | 16.72 | 8.42% | 1.23% | 1.56% | 18.79% | |
72 Outperform | $24.81B | 9.89 | 11.21% | 2.75% | 3.30% | 25.00% | |
70 Outperform | $8.35B | 13.12 | 14.34% | 0.96% | -2.53% | -4.03% | |
68 Neutral | $4.25B | 13.91 | 6.45% | 2.61% | -12.21% | -51.31% | |
66 Neutral | $5.53B | 14.55 | 6.78% | ― | -15.66% | -54.03% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
49 Neutral | $93.05M | ― | -56.63% | ― | -100.00% | -24.28% |
* Technology Sector Average
Performance Comparison
AVT
Avnet
49.15
3.73
8.21%
ARW
Arrow Electronics
105.88
-14.15
-11.79%
SNX
TD SYNNEX Corporation
129.32
26.48
25.75%
WCC
Wesco International
167.87
9.63
6.09%
HPE
Hewlett Packard Enterprise
17.96
0.44
2.51%
ANIX
Anixa Biosciences
2.92
-0.33
-10.15%
Avnet Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -5.61% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed outlook with significant challenges such as sales and margin declines, particularly in Europe and the Americas, and ongoing inventory issues. However, there are positive aspects, including strong cash flow, growth in Asia, and improved cost management at Farnell. Overall, the sentiment is cautiously optimistic about overcoming current challenges and leveraging growth opportunities.Highlights
Strong Cash Flow Generation
Generated over $300 million of cash flow from operations in the quarter, demonstrating effective working capital management.
Asia Pacific Sales Growth
Asia Pacific region showed year-over-year sales growth of 8%, indicating strong market performance despite global challenges.
Sequential Improvement in Farnell Operating Margin
Farnell operating margin improved by 47 basis points quarter-over-quarter, reflecting effective cost management.
Positive Demand Creation Trends
Demand creation revenues increased sequentially by 5%, with design registrations and wins also increasing, indicating future revenue potential.
Debt Reduction and Improved Leverage
Reduced debt by $385 million during the quarter, bringing gross leverage to 2.9 times, showcasing financial discipline.
Lowlights
Sales Decline Year-over-Year
Overall sales decreased by 9% year-over-year, with notable declines in EMEA (25%) and the Americas (14%).
Gross Margin Decline
Gross margin decreased by 86 basis points year-over-year and 32 basis points sequentially, partly due to a sales mix shift to Asia.
Weak Market Conditions in Europe
Continued weak demand in Europe due to economic and geopolitical factors, affecting Farnell sales and overall market performance.
Prolonged Inventory Challenges
Persistent high inventory levels, with certain regions and products experiencing excess and aged inventory, impacting financial metrics.
Guidance Indicates Further Decline
Guidance for the next quarter suggests a sequential sales decline of 6% to 11%, reflecting ongoing market and demand challenges.
Company Guidance
In the Avnet Second Quarter Fiscal Year 2025 earnings call, the company reported sales of $5.7 billion and an adjusted EPS of $0.87, both surpassing the midpoint of their guidance. The results were driven by robust performance in Asia, counterbalanced by weaker markets in the West, particularly Europe. Avnet generated over $300 million in cash flow from operations, with a global book-to-bill ratio remaining below parity, indicating continued pressure on backlog due to shorter lead times and ongoing customer destocking. Despite this, cancellations have stayed at normal levels. The company focuses on optimizing inventory and cost management while investing in business growth and operational capabilities. Avnet’s guidance for the third quarter anticipates sales between $5.05 billion and $5.35 billion, with diluted EPS in the range of $0.65 to $0.75, assuming persistent market conditions and an effective tax rate between 22% and 26%.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.