Avnet Q1 Earnings Beat Estimates, Stock Falls on Dim Q2 EPS Guidance

Core Insights - Avnet, Inc. reported better-than-expected first-quarter results for fiscal 2026, with earnings of 84 cents per share, exceeding the Zacks Consensus Estimate by 3.7%, although this represented an 8.7% decline year-over-year [1][9] - Net sales increased by 5.3% year-over-year to $5.9 billion, surpassing the consensus mark by 3.5%, driven by strong performance across operating segments [1][9] Financial Performance - The Electronic Components segment's revenues rose 4.6% year-over-year and 5.1% sequentially to $5.5 billion, exceeding estimates of $5.34 billion [3] - Farnell sales surged 14.9% year-over-year and 3.2% sequentially to $398.9 million, outperforming the estimate of $360.4 million [3] - Adjusted operating income was $150.7 million, down 10.8% year-over-year, with the Electronic Components segment's income declining 19.5% to $159 million, while Farnell's income increased ninefold to $17.1 million [4] Regional Sales Performance - Year-over-year sales increased 9.9% in Asia to $2.86 billion and 3% in the Americas to $1.37 billion, while EMEA sales slightly declined by 0.1% to $1.67 billion [4] Operating Margins - Avnet's adjusted operating margin decreased by 46 basis points to 2.6% from the previous year, with the Electronic Components segment's margin contracting by 86 basis points to 2.9%, while Farnell's margin improved by 375 basis points to 4.3% [5] Balance Sheet and Cash Flow - As of September 27, 2025, Avnet had cash and cash equivalents of $175.5 million, down from $192.4 million as of June 28, 2025, with long-term debt at $2.79 billion [6] - The company utilized $144.6 million in cash for operational activities during the quarter and repurchased approximately $138.3 million in shares while paying $28.5 million in dividends [6] Q2 Guidance - For the second quarter of fiscal 2026, Avnet expects revenues between $5.85 billion and $6.15 billion, with a midpoint of $6 billion, indicating a year-over-year increase of 1.8% [7] - Non-GAAP earnings are anticipated to be between 90 cents and $1 per share, while the consensus estimate is $1.01, suggesting a year-over-year increase of 16.1% [7]