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Avnet (AVT) to Report Q2 Earnings: What's in the Cards?

Avnet Inc.AVT is set to report second-quarter fiscal 2017 results on Jan 26. Last quarter, the company posted a positive earnings surprise of 1.11%. Let's see how things are shaping up for this announcement.

Factors at Play

Avnet posted mixed results for the first quarter of fiscal 2017, wherein the bottom line beat the Zacks Consensus Estimate while the top line missed the same. Moreover, both earnings and revenues declined on a year-over-year basis, primarily due to the impact of an extra week of sales in the year-ago quarter.

Note that Avnet has been taking major restructuring steps to mainly focus on the EM business. The divestment of the Technology Solution division will allow Avnet to focus on high growth areas such as marketing electronic components and related products in the supply chain. The company intends to use its resources to make investments in embedded solutions, IoT and critical digital platforms as well as expand its footprint in newer markets.

Most recently, Avnet inked a deal to distribute networking connectivity solutions related to analytics, big data and storage from Mellanox Technologies in Brazil, Chile, Colombia, Ecuador and Mexico. The agreement will help Avnet to provide its channel partners better solutions for datacenters, thus improving its revenue stream and possibly its market share. This in turn will impact results in the to-be reported quarter

However, 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 upturns and downturns. Intensifying competition from Arrow Electronics Inc. ARW also remains a headwind. These may impact results in the to-be reported quarter

Avnet, Inc. Price and EPS Surprise

Avnet, Inc. Price and EPS Surprise | Avnet, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Avnet will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) 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 75 cents per share. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter

Zacks Rank: Avnet has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Seagate Technology plc STX , with an Earnings ESP of +1.87% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Texas Instruments Incorporated TXN , with an Earnings ESP of +1.24% and a Zacks Rank #3.

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Seagate Technology PLC (STX): Free Stock Analysis Report

Arrow Electronics, Inc. (ARW): Free Stock Analysis Report

Avnet, Inc. (AVT): Free Stock Analysis Report

Texas Instruments Incorporated (TXN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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