Avnet shares soar as fiscal Q4 earnings beat Wall Street estimates
Avnet Inc. shares received a boost Thursday after the Phoenix-based electronics components distributor’s quarterly earnings exceeded Wall Street expectations amid a global inventory correction.
Avnet (Nasdaq: NVT) generated $5.6 billion in revenue during its fourth fiscal quarter that ended June 29, down $6.5 billion from the prior year. The company had adjusted earnings per share of $1.22 a share, down from $2.06 a share in the prior year, according to a regulatory filing.
Analysts surveyed by Zacks Investment Research anticipated the company would generate $5.36 billion in revenue and earnings per share of 95 cents.
“We are pleased with our fiscal 2024 performance as we executed well, despite some challenging market conditions,” Phil Gallagher, Avnet’s CEO, said in a statement. “… We are well positioned entering into fiscal year 2025 and I am confident we have the right team and strategy in place to benefit from the eventual market recovery.”
After releasing its results, the company’s shares rose 6.8% to close Thursday at $53.37 a share amid a strong day of recovery for tech stocks. Track the stock here. Avnet is Arizona’s largest public company, measured by annual revenue and net income, according to Business Journal research.
On an earnings call Thursday, Gallagher said Avnet has “more work to do” as it remains focused on reducing inventory.
While the company slightly reduced inventory to 204 days in the fourth fiscal quarter and has more than it needs to support “near-term demand in some areas,” it wants to make “strategic investments” in other areas, he added.
“Having the right inventory is still a key growth enabler and is an important part of our value proposition at the center of the technology supply chain,” Gallagher said.
Avnet’s electronic components segment — a significant part of its business — generated $5.2 billion in sales, marking a 15.1% decrease over the prior year.
In July, Avnet launched Tria Technologies, a new product brand that will design and manufacture embedded compute modules and systems.
“The new distinct brand will improve our ability to compete with other standalone brands and embedded solutions,” Gallagher said.
Farnell — another segment of Avnet’s business that distributes electronics components and industrial products — generated $375,200 in revenue during the fourth fiscal quarter, down 15.8% due to market softness.
Company is seeing an increase in demand from some sectors
Avnet, however, is seeing an increase in demand from customers in the aerospace, defense and industrial markets. What’s more, the company is also seeing signs that the market correction may be nearing its final phase in Asia and expects a return to revenue growth later this year.
“I continue to feel optimistic about the long-term trends in the demand for technology and the pervasiveness of electronics in so many applications today and in the future,” Gallagher said. “This includes those driven by AI adoption as companies explore innovative ways to leverage its capabilities in both the data center and ultimately, edge computing applications.”
Overall, Avnet generated $23.8 billion in revenue during fiscal year 2024. The company also reduced its debt by $56 million in Q4.
Avnet expects to generate between $5.2 billion and $5.5 billion and earnings per share between 80 cents and 90 cents a share in Q1 of fiscal 2025.
“As we enter fiscal year 2025, the prevailing belief is that the market correction seems to be in its last stages,” Gallagher said. “… Until then, we will continue to navigate through this market and control what we can control in anticipation of a brighter demand environment in the quarters to come.”