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]

Core Insights - Bristol Gate Capital Partners' Q3 2025 investor letter indicates that the US Equity Strategy underperformed the S&P 500® Total Return Index this quarter, primarily due to limited exposure to the AI/TMT and Value sectors, which benefited from the Federal Reserve's rate cut [1] - Despite underperformance, the portfolio achieved a 15% dividend growth over the past 12 months, supported by strong underlying fundamentals [1] Company Highlights - Amphenol Corporation (NYSE:APH) is highlighted as a key stock in the investor letter, with a one-month return of -3.74% and a 52-week gain of 96.11% [2] - As of December 30, 2025, Amphenol's stock closed at $136.20 per share, with a market capitalization of $166.716 billion [2] - Bristol Gate built a position in Amphenol while exiting Marsh & McLennan, citing its high-quality franchise, proprietary technology, and strong demand in the Information and Datacom segment [3] Financial Performance - Amphenol's Q3 sales increased by 53% in US dollars and 52% in local currencies, reaching $6.194 billion [4] - The company has achieved a 10% CAGR in sales and a 13% CAGR in EPS over the last decade, indicating robust growth and consistent dividend increases [3]

Core Viewpoint - Avnet (AVT) is currently rated as a Zacks Rank 5 (Strong Sell) despite having recently surpassed the Zacks Consensus Estimate for earnings [1] Company Overview - Avnet, Inc. specializes in the distribution and sale of electronic components, operating through two segments: Electronic Components and Farnell [2] - The Electronic Components segment focuses on marketing and selling semiconductors, interconnects, passive and electromechanical devices, and integrated components [2] - The Farnell segment is dedicated to distributing electronic components and related products to the electronic system design community through multi-channel sales and marketing resources [2] - Founded in 1921 by Charles Avnet, the company is headquartered in Phoenix, AZ [2] Earnings History - Avnet has beaten the Zacks Consensus Estimate in three of the last four quarters, indicating some level of management effectiveness in meeting market expectations [4] - The most recent quarter reported an EPS of $0.84, exceeding the consensus estimate of $0.81 [4] Earnings Estimates - Recent trends show a decline in annual earnings estimates for Avnet, with the current fiscal year consensus dropping from $4.61 to $4.36 over the last 90 days [5] - The next fiscal year's estimate has also decreased from $6.68 to $6.50 in the same timeframe [5] - The negative movement in earnings estimates is a significant factor contributing to Avnet's Zacks Rank of 5 (Strong Sell) [5] Market Context - A broader trend within the Zacks universe indicates that many stocks are experiencing negative earnings estimate revisions, leading to a decline in their rankings [6]