Why Is Avnet (AVT) Down 1.7% Since Last Earnings Report?

It has been about a month since the last earnings report for Avnet (AVT). Shares have lost about 1.7% in that time frame, outperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Avnet due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Avnet's Q2 Earnings Miss Estimates, Revenues SurpassAvnet reported lower-than-expected second-quarter fiscal 2025 bottom-line results with non-GAAP earnings of 87 cents per share. Despite quarterly earnings complying with management’s guidance of 80-90 cents per share, it missed the Zacks Consensus Estimate by 1.14%. The bottom line declined 38% year over year, demonstrating a weaker operating margin compared to the previous year.Avnet’s revenues of $5.7 billion for the second quarter of fiscal 2025 surpassed the consensus mark by 2.01% and came at the high-end management’s guidance of $5.4-$5.7 billion. However, the top line decreased by 9% on a year-over-year basis, reflecting challenging market conditions in the West, specifically Europe, partially offset by the strong performance in Asia.Avnet’s Q2 2025 DetailsThe Electronic Components segment’s revenues were down 8.5% year over year but increased 1.2% sequentially to $5.32 billion. Our estimates for the Electronic Components segment’s revenues were pegged at $5.19 billion.Farnell sales declined 12% year over year and 0.4% sequentially to $345.6 million. Our estimates for the Farnell segment’s revenues were pegged at $359.7 million.From a regional perspective, on a year-over-year basis, sales increased 8.4% in Asia to $2.71 billion but declined 25.1% in EMEA to $1.58 billion and 13.8% in the Americas to $1.37 billion.The adjusted operating income came in at $159.5 million, which decreased 34.2% year over year. The adjusted operating income for the Electronic Components segment declined 27% to $182 million, while that for Farnell fell 78% to $3 million.Avnet’s adjusted operating margin shrank 110 bps to 2.8% from the year-ago quarter. Electronic Components adjusted operating margin contracted 85 bps to 3.4%, while Farnell’s declined 299 bps to 1%.AVT’s Balance Sheet & Cash FlowAs of Dec. 28, 2024, AVT had cash and cash equivalents of $172.1 million compared with $267.5 million reported at the end of Sept. 30, 2024.The long-term debt was $2.57 billion as of Dec. 28, 2024, higher than the $2.43 billion reported in the previous quarter. Avnet generated $338 million of cash from operational activities during the fiscal second quarter of fiscal 2025.In the second quarter, AVT repurchased approximately $51 million worth of shares, representing 1.1% of shares outstanding. AVT returned $29 million to its shareholders in dividends.AVT’s Q3 Guidance Not So PromisingFor the third quarter of fiscal 2025, Avnet anticipates revenues in the range of $5.05-$5.35 billion (midpoint of $5.20 billion). The guidance suggests a sequential decline in sales between 6% and 11%. In comparison to normal seasonal sales growth, this sales guidance suggests anticipations of modest sales declines in the western regions and seasonal sales declines in Asia as a result of the Lunar New Year.AVT expects non-GAAP earnings in the range of 65-75 cents per share.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.The consensus estimate has shifted -34.17% due to these changes.VGM ScoresAt this time, Avnet has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Avnet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 Avnet, Inc. (AVT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks