What Happened?
Shares of electronic components distributor Avnet (NASDAQGS:AVT) fell in the afternoon session after the company's fourth-quarter earnings forecast fell short of analyst expectations. The negative reaction from investors occurred even though Avnet's third-quarter results topped Wall Street estimates. The company reported adjusted earnings of $0.84 per share on revenue of $5.9 billion, both of which were better than anticipated. Additionally, revenue guidance for the fourth quarter was optimistic at $6 billion, surpassing estimates. However, the disappointing earnings per share forecast for the next quarter overshadowed the otherwise solid performance, prompting a sell-off. Avnet guided for fourth-quarter adjusted earnings of $0.95 per share at the midpoint, which missed the analyst consensus of $1.02.
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What Is The Market Telling Us
Avnet’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 8.1% on the news that the company reported its fourth-quarter financial results and issued a weak forecast for the upcoming quarter. Although the company's quarterly revenue and adjusted earnings surpassed analyst expectations, investors concentrated on the significant year-over-year decline in full-year sales and profits. Avnet's profitability also faltered as operating margins contracted for both the fourth quarter and the entire fiscal year. Capping the report, the company's earnings guidance for the next quarter fell below consensus estimates, suggesting to investors that challenges remained.
Avnet is down 2.3% since the beginning of the year, and at $50.46 per share, it is trading 12.5% below its 52-week high of $57.69 from October 2024. Investors who bought $1,000 worth of Avnet’s shares 5 years ago would now be looking at an investment worth $2,046.
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