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

Core Viewpoint - Avnet's recent earnings report indicates a mixed performance, with revenues surpassing estimates but earnings falling short, reflecting challenging market conditions and a downward trend in estimates leading into the next quarter [2][3][11]. Financial Performance - Avnet reported non-GAAP earnings of 87 cents per share for Q2 fiscal 2025, missing the Zacks Consensus Estimate by 1.14% and declining 38% year over year [2]. - Revenues for the second quarter reached $5.7 billion, exceeding the consensus mark by 2.01% and aligning with management's guidance, but down 9% year over year [3]. - The Electronic Components segment generated revenues of$ 5.32 billion, down 8.5% year over year but up 1.2% sequentially [4]. - Farnell sales decreased by 12% year over year to $345.6 million [4]. Regional Performance - Year-over-year sales increased by 8.4% in Asia to$ 2.71 billion, while EMEA sales fell by 25.1% to $1.58 billion and Americas sales declined by 13.8% to$ 1.37 billion [5]. Operating Income and Margins - Adjusted operating income was $159.5 million, down 34.2% year over year, with the Electronic Components segment's operating income declining 27% to$ 182 million [5][6]. - The adjusted operating margin shrank to 2.8%, a decrease of 110 basis points from the previous year [6]. Balance Sheet and Cash Flow - As of December 28, 2024, Avnet had cash and cash equivalents of $172.1 million, down from$ 267.5 million at the end of September 2024 [7]. - Long-term debt increased to $2.57 billion from$ 2.43 billion in the previous quarter [7]. - The company generated $338 million in cash from operational activities during the fiscal second quarter [7]. Shareholder Returns - Avnet repurchased approximately$ 51 million worth of shares, representing 1.1% of shares outstanding, and returned $29 million to shareholders in dividends [8]. Future Guidance - For Q3 fiscal 2025, Avnet anticipates revenues between$ 5.05 billion and $5.35 billion, indicating a sequential decline of 6% to 11% [9]. - Expected non-GAAP earnings for the next quarter are projected to be between 65 and 75 cents per share [10]. Estimate Trends - There has been a downward trend in estimates, with the consensus estimate shifting down by 34.17% over the past month [11]. VGM Scores - Avnet has an average Growth Score of C, a Momentum Score of F, and a Value Score of A, placing it in the top 20% for the value investment strategy [12]. Overall Outlook - Estimates for Avnet are trending downward, and the company holds a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [13].