It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.It also includes access to the Zacks Style Scores. ...

Market Overview - The U.S. equity market has experienced a subdued performance in February following a strong January, primarily due to an AI-driven sell-off impacting software stocks [1] - Geopolitical tensions, particularly between the U.S. and Iran, have intensified, contributing to market unease alongside a significant decline in cryptocurrency [2] Investment Opportunities - Despite market volatility, investors are encouraged to consider broker-favored stocks such as Arrow Electronics (ARW), American Airlines (AAL), Cross Country Healthcare (CCRN), Avnet (AVT), and Dana Incorporated (DAN) [2] - A screening strategy has been developed to identify stocks with improving broker recommendations and upward revisions in earnings estimates over the past four weeks, utilizing the price/sales ratio as a complementary valuation metric [3][4] Stock Screening Criteria - The screening criteria include: - Top 75 companies with net upgrades in broker ratings over the last four weeks [4] - Top 10 stocks with upward revisions in earnings estimates for the upcoming quarter [4] - Companies in the bottom 10% of price/sales ratios among over 7,700 stocks [4] - Stocks trading above $5 and with an average daily volume greater than 100,000 shares over the last 20 trading days [5] Company Highlights - **Arrow Electronics (ARW)**: A leading distributor of electronic components, expected to benefit from partnerships and innovation in AI-powered technologies. The company has a Zacks Rank of 1 (Strong Buy) with a projected EPS growth rate of 15.2% over 3-5 years and a history of earnings surpassing estimates by an average of 15.9% [6][8] - **American Airlines (AAL)**: Based in Fort Worth, TX, the company is seeing increased air travel demand but faces challenges from high labor costs and debt levels. The Zacks Consensus Estimate for 2026 earnings has been revised upward by 13.4% over the past 60 days, with a Zacks Rank of 2 (Buy) [9] - **Cross Country Healthcare (CCRN)**: This company is benefiting from strong relationships and momentum in home care and staffing. It has a Zacks Rank of 3 (Hold) but has missed earnings estimates in the last four quarters with an average negative surprise of 38.2% [10][11] - **Avnet (AVT)**: The company is capitalizing on strength in defense and data center markets, with a focus on the Internet of Things. It has a Zacks Rank of 3 and has consistently surpassed earnings estimates by an average of 10.9% [12] - **Dana Incorporated (DAN)**: Specializing in thermal-management products for the automotive sector, Dana is implementing cost-reduction measures to mitigate the impact of tariffs and inflation. The Zacks Consensus Estimate for 2026 earnings has remained stable, and the company holds a Zacks Rank of 3 [13]

Company Overview - Arrow Electronics Inc. is one of the world's largest distributors of electronic components and enterprise computing products, providing a broad range of products and value-added services to enhance customer competitiveness [12]. Investment Rating - Arrow Electronics has a Zacks Rank of 1 (Strong Buy) and a VGM Score of A, indicating strong potential for investment [13]. Performance Metrics - The stock has shown significant momentum, with shares up 36% over the past four weeks [13]. - Three analysts have revised their earnings estimates higher for fiscal 2026, with the Zacks Consensus Estimate increasing by $1.22 to $13.08 per share [13]. - Arrow Electronics boasts an average earnings surprise of +17.9% [13]. Investment Strategy - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, Arrow Electronics is recommended for investors looking for strong growth potential [14].

Core Insights - Zacks Premium provides tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1][2] Zacks Style Scores - Zacks Style Scores rate stocks based on value, growth, and momentum, helping investors identify securities likely to outperform the market in the short term [2][3] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [3] Value Score - The Value Style Score identifies attractive stocks using financial ratios like P/E, PEG, and Price/Sales, focusing on undervalued stocks [3] Growth Score - The Growth Style Score assesses a company's financial health and future outlook, considering projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Style Score helps investors capitalize on price trends, using metrics like weekly price changes and monthly earnings estimate changes [5] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors seeking value, growth, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary model based on earnings estimate revisions, with 1 (Strong Buy) stocks achieving an average annual return of +23.83% since 1988, significantly outperforming the S&P 500 [7][9] - There are over 800 stocks rated 1 or 2, making it essential for investors to utilize Style Scores to narrow down choices [8] Stock to Watch: Avnet (AVT) - Avnet is a leading distributor of electronic components, serving a diverse customer base including OEMs and VARs, with a vast inventory from over 300 manufacturers [11] - AVT holds a 3 (Hold) Zacks Rank and a VGM Score of A, with a Momentum Style Score of A, reflecting a 27.9% increase in share price over the past four weeks [12] - Recent upward revisions in earnings estimates for fiscal 2026 have increased the Zacks Consensus Estimate by $0.18 to $4.55 per share, with an average earnings surprise of +10.9% [12][13]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates involves navigating volatility and inherent risks [1] Group 1: Company Overview - Avnet (AVT) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 0.7%, but projected EPS growth for this year is expected to be 29.7%, significantly higher than the industry average of 17.5% [4] Group 2: Financial Metrics - Avnet's asset utilization ratio is 1.87, indicating that the company generates $1.87 in sales for every dollar in assets, outperforming the industry average of 1.36 [5] - The company's sales are projected to grow by 8.8% this year, compared to the industry average of 5% [6] Group 3: Earnings Estimates - There has been a positive trend in earnings estimate revisions for Avnet, with the Zacks Consensus Estimate for the current year increasing by 1.5% over the past month [8] - Avnet's combination of a Zacks Rank 2 and a Growth Score of A positions it well for potential outperformance in the market [10]

Core Insights - Avnet reported second-quarter fiscal 2026 results that exceeded the high end of the company's sales and earnings guidance, driven by record revenue in Asia and improved demand across multiple end markets [5][7] Financial Performance - Adjusted operating income was $172 million with a total adjusted operating margin of 2.7% [1] - Sales reached $6.3 billion, representing a 12% year-over-year increase and a 7% sequential increase, surpassing guidance [3][7] - Adjusted diluted earnings per share (EPS) were $1.05, exceeding the high end of guidance for the quarter [7] - Gross margin was reported at 10.5%, described as "flattish" year-over-year and slightly up sequentially [2] Segment Performance - Electronic components generated an operating income of $187 million with a 3.2% operating margin, while Farnell produced an operating income of $20 million with a 4.7% operating margin, the latter being the highest since fiscal 2023 [1][4] - Farnell's gross margins improved by over 100 basis points year-over-year but decreased by 25 basis points sequentially [2] Regional Highlights - Asia sales exceeded $3 billion, marking the sixth consecutive quarter of year-over-year growth and now account for over 50% of total sales [3][12] - Sales in Europe increased year-over-year and sequentially, with clear signs of recovery noted [13] - The Americas also saw sales growth for the second consecutive quarter, led by aerospace and defense [14] Demand and Supply Chain Dynamics - Demand signals are resetting higher, particularly driven by data center and AI demand, with lead times trending upward across most product categories [9][10] - The pricing environment remained stable, although spot price increases were noted in some areas, indicating potential upward pricing pressure as supply tightens [11] Working Capital and Inventory Management - Working capital improved with inventory reduced by $126 million, resulting in 86 days of inventory at quarter-end [6][18] - The company aims to reduce total inventory days to below 80 [18] Guidance and Outlook - For Q3 fiscal 2026, sales are guided to be between $6.2 billion and $6.5 billion, with diluted EPS expected to be between $1.20 and $1.30, implying modest sequential growth [20][21] - The guidance reflects anticipated growth in the Americas and EMEA, with a slight seasonal decline in Asia due to the Lunar New Year [21]

Financial Data and Key Metrics Changes - The company achieved sales of $6.3 billion in the second quarter, representing a 12% year-over-year increase and a 7% sequential increase [13][4] - Adjusted diluted earnings per share were $1.05, exceeding the high end of guidance and growing nearly four times compared to the previous quarter [16][21] - Operating margin for electronic components was 3.2%, while Farnell's operating margin was 4.7%, marking the highest for Farnell since fiscal 2023 [16][11] Business Line Data and Key Metrics Changes - Electronic components sales increased by 11% year-over-year and 7% sequentially, with a constant currency increase of 9% year-over-year [13][14] - Farnell sales grew by 24% year-over-year and 7% sequentially, with a constant currency increase of 20% year-over-year [14][10] - Demand creation revenues increased sequentially by 7%, indicating positive trends in converting design wins into revenues [9] Market Data and Key Metrics Changes - Sales in Asia reached a record high of over $3 billion, marking the sixth consecutive quarter of year-on-year sales growth in the region [8][13] - Year-over-year sales increased by 17% in Asia, 8% in Europe, and 5% in the Americas [13] - The pricing environment remained stable, but upward pricing pressure is anticipated across many technologies due to supply dynamics [7][34] Company Strategy and Development Direction - The company is focused on expanding operating margins, optimizing inventory, and generating cash flow while making necessary investments for future growth [5][12] - There is an emphasis on improving return on working capital and overall return on invested capital [20][19] - The company aims to leverage its diverse supplier line card and customer base to drive profitable growth [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong demand signals and improving visibility into customer orders [6][29] - The company anticipates continued growth and margin expansion in 2026, supported by a recovering market and improved operational leverage [12][21] - Management noted that the demand for electronic components is broadening, driven by sectors such as data centers and artificial intelligence [5][6] Other Important Information - The company generated $208 million in cash flow from operations during the quarter and reduced inventory by $126 million [20][17] - The company paid a quarterly dividend of $0.35 per share, totaling $28 million [21] - Guidance for the third quarter of fiscal 2026 includes sales in the range of $6.2 billion to $6.5 billion and diluted earnings per share between $1.20 and $1.30 [21] Q&A Session Summary Question: Can you discuss the linearity of orders during the quarter and the duration of your backlog? - Management noted that bookings typically tail off in December, but billings continue, indicating a positive trend in order visibility and customer engagement [25][26][29] Question: What are the pricing pressures in specific end markets? - Management indicated that while pricing has remained stable, there are signs of upward pressure in memory, storage, and certain capacitors, driven by increased demand from data centers [34][49] Question: How do you expect the March quarter to perform relative to seasonality? - Management expects a typical seasonal bounce back in the West, with high single-digit growth anticipated, while Asia may see a less than seasonal decline due to Lunar New Year [38][45] Question: Can core business margins grow year-over-year for the remaining quarters? - Management expressed confidence in margin expansion as the West recovers, with expectations for continued momentum in operating margins [45][46] Question: How does pricing from suppliers impact revenues and margins? - Management explained that pricing affects average selling prices, with contracted customers absorbing price increases, while spot buys can lead to improved margins [48][49]

Financial Data and Key Metrics Changes - The company achieved sales of $6.3 billion in the second quarter, representing a 12% year-over-year increase and a 7% sequential increase [13][4] - Operating margin for the electronic components business was 3.2%, while Farnell's operating margin was 4.7% [4][16] - Adjusted diluted earnings per share reached $1.05, exceeding the high end of guidance and growing nearly four times compared to the previous quarter [16][21] - Gross margin was stable at 10.5%, with electronic component gross margins impacted by faster growth in Asia compared to the West [14][16] Business Line Data and Key Metrics Changes - Electronic components sales increased by 11% year-over-year and 7% sequentially, with Farnell sales growing 24% year-over-year and 7% sequentially [13][14] - Demand creation revenues increased sequentially by 7%, indicating a positive trend in converting design wins into revenues [9] - The IP&E business experienced double-digit growth year-over-year, contributing to higher gross margins [10] Market Data and Key Metrics Changes - Sales in Asia reached a record high of over $3 billion, marking the sixth consecutive quarter of year-over-year growth in the region [8] - Year-over-year sales growth was 17% in Asia, 8% in Europe, and 5% in the Americas [13] - The pricing environment remained stable, but upward pricing pressure is anticipated across many technologies due to supply dynamics [7] Company Strategy and Development Direction - The company is focused on expanding operating margins, optimizing inventory, and generating cash flow while investing in future growth [5][12] - There is an emphasis on improving return on working capital and maintaining a strong balance sheet by reducing leverage [20] - The company aims to leverage its diverse supplier line card and customer base to enhance its market position [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong demand signals and improving visibility from customers [29][45] - The company anticipates continued growth and margin expansion in 2026, supported by a recovery in the West and improved demand in Asia [12][22] - Management noted that the current operating environment presents opportunities to address supply chain complexities [7] Other Important Information - The company generated $208 million in cash flow from operations during the quarter and reduced inventory by $126 million [20][17] - The third quarter guidance projects sales between $6.2 billion and $6.5 billion, with expectations for growth in the Americas and EMEA [21] Q&A Session Summary Question: Can you discuss the linearity of orders during the quarter? - Management noted that bookings typically tail off in December, but billings continue, indicating a positive book-to-bill ratio [25][26] Question: What are the pricing pressures in specific end markets? - Management indicated that pricing pressures are emerging in memory, storage, and certain capacitors, driven by demand from data centers and industrial customers [33][34] Question: How does the company view operating margin growth for the remaining quarters? - Management expects continued momentum in operating margins, particularly as the West recovers, with a focus on improving profitability [45][46]

Financial Data and Key Metrics Changes - The company achieved sales of $6.3 billion in Q2 2026, representing a 12% year-over-year increase and a 7% sequential increase [12] - Adjusted diluted earnings per share reached $1.05, exceeding the high end of guidance and growing nearly four times compared to the previous quarter [15] - Gross margin for the quarter was 10.5%, remaining stable year-over-year and slightly up sequentially [13] Business Line Data and Key Metrics Changes - Electronic components sales increased by 11% year-over-year and 7% sequentially, with constant currency sales up 9% year-over-year [12] - Farnell sales grew 24% year-over-year and 7% sequentially, with constant currency sales up 20% year-over-year [12] - Operating margin for electronic components was 3.2%, while Farnell's operating margin was 4.7%, marking the highest for Farnell since fiscal 2023 [15] Market Data and Key Metrics Changes - Sales in Asia increased by 17% year-over-year, accounting for over 50% of total sales, compared to approximately 48% in the previous quarter [12] - EMEA sales grew 8% year-over-year, showing signs of recovery across most end markets [12] - The Americas saw a 5% year-over-year sales increase, with aerospace and defense leading the growth [12] Company Strategy and Development Direction - The company is focused on expanding operating margins, optimizing inventory, and generating cash flow while investing in future growth [4] - There is an emphasis on demand creation, supply chain services, and embedded solutions to drive growth and margin expansion [8] - The company aims to improve return on working capital and overall return on invested capital [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a diverse supplier line card and a stable leadership team [10] - Demand signals are improving globally, with lead times trending higher across most product categories, driven by data center and AI demand [5] - The company anticipates continued growth and margin expansion in 2026, supported by a favorable regional mix and improving market conditions [21] Other Important Information - The company generated $208 million in cash flow from operations during the quarter and reduced inventory by $126 million [18] - Working capital days decreased to 88 days, indicating improved efficiency [16] - The company paid a quarterly dividend of $0.35 per share, totaling $28 million [19] Q&A Session Summary Question: Can you discuss the linearity of orders during the quarter and the duration of the backlog? - Management noted that bookings typically tail off in December, but billings continued strongly, with positive book-to-bill ratios [24][25] - There is an increasing trend of customers placing orders within lead times, indicating improved visibility [26] Question: What are the pricing pressures in specific end markets? - Management indicated that pricing pressures are emerging in memory, storage, and certain capacitors, driven by increased demand from data centers [32][33] Question: How does the guidance for the March quarter compare to previous years? - Management expects typical seasonality with growth in the West, while Asia may see a less significant decline due to Lunar New Year [35][36] Question: Will core business margins grow year-over-year for the remaining quarters? - Management anticipates continued momentum in operating margins, especially as the West recovers [44][45] Question: How do supplier price increases impact revenues and margins? - Price increases affect average selling prices, with contracted customers absorbing costs, while spot buys can lead to higher margins [47][48] Question: Can Farnell margins accelerate with the recovery in Europe? - Management expects incremental improvements in Farnell margins, potentially exceeding 50-100 basis points as revenues increase [50][51]

Core Insights - Avnet reported revenue of $6.32 billion for the quarter ended December 2025, reflecting an 11.6% increase year-over-year and a surprise of +5.28% over the Zacks Consensus Estimate of $6 billion [1] - Earnings per share (EPS) for the quarter was $1.05, up from $0.87 in the same quarter last year, with an EPS surprise of +10.53% compared to the consensus estimate of $0.95 [1] Financial Performance Metrics - Sales from Farnell reached $427.1 million, exceeding the three-analyst average estimate of $407.69 million, marking a year-over-year increase of +23.6% [4] - Sales from Electronic Components were reported at $5.89 billion, surpassing the average estimate of $5.59 billion, with a year-over-year change of +10.8% [4] - Operating income for Electronic Components was $187.1 million, compared to the average estimate of $171.1 million [4] - Operating income for Farnell was $20 million, exceeding the average estimate of $15.96 million [4] - Corporate expenses reported an operating loss of $35.3 million, worse than the average estimate of $-26.12 million [4] Stock Performance - Avnet's shares have returned +7.6% over the past month, outperforming the Zacks S&P 500 composite's +0.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]