Here is information about providing an overview of Avnet Electronics and reviewing their stock
Avnet Electronics: An Overview
Avnet Electronics was established in 1921 and it is a global electronics distributor that deals in electronic components and embedded solutions, and supply-chain management services. Avnet is based in Phoenix, Arizona and has offices in over 30 countries with approximately 14,500 employees.
Avnet electronics has a broad client base that consists of OEMs, EMS, and value-added resellers in the technology industry. It is involved in the sale of electronic components manufactured by various companies including Texas Instruments, Intel, Samsung and Analog Devices. Apart from component distribution services, Avnet also offers design chain and supply chain services to facilitate the introduction of electronic products into the market.
Key facts about Avnet Electronics:Key facts about Avnet Electronics
- - 2021 revenue: In excess of $19.5 billion
- - A large American multinational corporation ranked 120 in the recently released Fortune 500 list.
- - Divisions: Electrical and Electronic Components and Farnell
- - Key customer markets: automotive, medical, defense aerospace & industrial IoT
- - International chain with approximate number of outlets 300 around the globe
Avnet has stock with over 1,500 component and embedded solutions suppliers and hence it has large inventory across the world. This enables Avnet to transport stock directly to customers as soon as an order is placed. Avnet also provides other supply chain solutions such as kitting, logistics, and inventory management services to improve its customers’ operations.
Avnet electronics has grown over the 100 years and through organic growth as well as mergers and acquisitions. Some of the merger include Bell Industries in 1991, Kent Electronics in 2003, Memec Group in 2005, Premier Farnell in 2016. In the case of Premier Farnell acquisition, Avnet got the Farnell brand and a better reach in Europe.
Avnet Corp Stock Review and Analysis
In the case of Avnet which is one of the leading companies in the technology products distribution market, its stock analysis involves analysis of its financial position, competition, trends and other factors. Here is some brief information about Avnet and its stock, including some of the metrics that may suggest the potential for upside.
Avnet Stock Key Metrics
- - Ticker: AVT
- - Exchange: NasdaqGS
- - market Cap: $4.53B
- - P/E Ratio: 6.7x
- - Revenue (TTM): $19.5B
- - Net Income (TTM): It is forecasted to be worth more than $550M.
- - EPS (TTM): $5.72
On the valuation front, Avnet presently has a P/E ratio of 6.7x that is significantly below distribution peers, such as Arrow Electronics’ P/E of 7.1x and Tech Data’s P/E of 14.8x. This could be an indication that Avnet’s stock price is currently undervalued. Currently, Avnet is trading below its book value per share and has a strong balance sheet, which shows that it has sufficient cushion against volatile economic environment.
Avnet has had a better performance compared to the S&P 500 index in the last one year as it has posted 8.2% return while the S&P 500 index has suffered -15.5% loss. The stock reached its 52-week high of $50.87 in August this year.
Growth Outlook and Competitive Position
Taking into account some of the latest mergers and acquisitions, Avnet seems to be more oriented toward growing its embedded solutions for IoT nodes and edge computing. As the IoT usage is predicted to grow across industries in the future, Avnet is enhancing its strategic directives compatible with long-term tendencies.
Avnet operates in the sphere of electronic components distribution and holds a favorable competitive position as an authorized distributor tightly connected with the partner networks of the leading suppliers. This large scale of the company, extensive range of inventory and supply chain services make Avnet a distribution platform of choice for both, component makers and OEM customers.
Although smaller distributors can be more specialized, Avnet has any electronic component or device needed by a company, almost. This places Avnet Electronics as the distribution enabler for technology advancement in the global market, across industries.
Recent Financial Performance and Dividends
In Q4 2022, Avnet registered QoQ sales growth of 3.9% and YoY sales growth of 16.9% and achieved the record high of quarterly revenues $6.37 billion. For the full fiscal year of 2022, the company reported $24.31 billion in total revenues, an 18.1% increase from fiscal 2021. Avnet posted a better top-line expansion compared to their industry peers such as Arrow Electronics, with a 15.7% increase in revenues.
Gross profit margin was better than the previous financial year and it stood at 12% compared with 10.3%. However, operating expenses increased during the FY2022 and therefore the operating income margin was constant at 3.7%. Management intends to expand operating margins in the longer term through operating efficiencies and better absorption of expenses through revenues.
Net income attributable to shareholders in Q4 2022 was 64% higher than in the corresponding period of 2021 at $241 million or $2.51 per share. An even greater amount of growth can be observed in the net profit signifying Avnet’s recovery and the improvement of its profitability.
This coupled with shareholder returns, Avnet electronics offers a 3.1% dividend yield on an annual basis. Currently, the company pays a quarterly dividend of $0.29 per share, which makes Avnet’s payouts predictable for income investors.
Wall Street Analysts' Opinion:
Most of the analysts who have commented on Avnet electronics stock in the past months have maintained an optimistic outlook. In August 2022, Cowen & Company increased their price target from $47 to $57 in reaction to well-performing Q4 earnings. They benchmark Avnet against competitors and explain that Avnet is the leading distributor of electronic components, and there are long-term drivers for technology hardware.
Likewise, analysts in Stifel boosted their price prediction on Avnet stock from $48 to $53. They point to the growth of gross profit margins and the ability of the margins to continue growing in the longer-term.
The current average analyst price target is $54.40, which is around 12.5% above the current share price. Investors have given Avnet a moderate buy or buy recommendation with 7 out of 8 analysts covering the stock rate.
Conclusion: Positioned in Expanding Business Sector
All in all, Avnet Electronics is still a dominant global distributor that provides components and solutions to make innovative technologies come to life. The company has relatively stable financial performance and good financial position.
The long-term growth opportunities of the industries of IoT, electric vehicles, artificial intelligence, and other emerging fields are positive signs for the electronic components distribution. Based on Avnet’s competitive advantages, the future prospects look favorable for the business.
Based on current valuations and possessing a lower P/E ratio than the majority of distribution peers and its own book value, Avnet is a possible value investment at the current time. Given analysts’ upside expectations and their enthusiasm, Avnet deserves investors’ attention for solid dividend payouts and access to technology supply chains globally. Even though factors such as inflation and recession are likely to affect near-term returns, Avnet’s stock might generate value over the long run.
