Avnet (AVT) Q1 Earnings: Will It Pull Off A Surprise?
Zacks Investment Research | Oct 24, 2016 11:35PM ET
Avnet Inc. (NYSE:AVT) is scheduled to report first-quarter fiscal 2017 results on Oct 27. Last quarter, the company posted a positive earnings surprise of 3.6%. Let's see how things are shaping up for this announcement.
Factors to Consider
Avnet posted better-than-expected results in the fourth quarter of fiscal 2016, wherein both the top and the bottom line beat the respective Zacks Consensus Estimate. However, both earnings and revenues declined on a year-over-year basis, primarily due to dull performance at the TS and EM business.
Avnet recently completed the much awaited acquisition of Premier Farnell plc in a total cash deal worth approximately £691 million. This is the company’s biggest ever acquisition deal. Avnet believes that the acquisition will strengthen its worldwide digital footprint.
We believe that the acquisition will not only increase Avnet’s revenues base but also strengthen the Electronics Marketing division’s offerings.
Furthermore, Avnet expects the transaction to be immediately accretive to its revenues and earnings both. Additionally, once fully integrated, the Premier Farnell business is projected to generate annual synergies of approximately $70 million to $80 million.
Note that a significant portion of Avnet’s revenues are derived from the sale of semiconductors – a cyclical industry characterized by changes in technology and manufacturing capacity, and subject to significant market upturns and downturns.
Nonetheless, Avnet’s leading position in electronics distribution, continuous cost cutting initiatives and acquisition synergies are encouraging. However, competition from Arrow Electronics Inc. (NYSE:ARW) and Ingram Micro remains a material headwind.
AVNET Price and EPS Surprise
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