Avnet to Post Q4 Earnings: Time to Buy, Sell or Hold the Stock?

AVT’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average earnings surprise of 9.5%.

AVT projects its fourth-quarter fiscal 2026 non-GAAP revenues in the range of $7.30-$7.60 billion. The Zacks Consensus Estimate for the same is pegged at $7.45 billion, suggesting year-over-year growth of 32.7%. Estimates have remained unchanged in the past 60 days.

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What Our Model Says?

Our proven model does not conclusively predict an earnings beat for Avnet Inc. this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Though Avnet currently carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Influence Avnet’s Q4 Results

Avnet’s Electronic Components segment performance in the fiscal fourth quarter is likely to have benefited from improving demand across industrial, networking and data center markets, supported by the ongoing recovery in the semiconductor cycle. Strong demand for AI infrastructure, coupled with broad-based strength across Asia, the Americas and Europe, is expected to have continued driving growth in the to-be-reported quarter.

Improving component supply dynamics, rising lead times and growing customer backlog are likely to have supported sales momentum during the quarter. Increasing memory prices amid tighter supply conditions are also expected to have provided an additional boost to revenues.

The Farnell business is expected to have maintained its recovery trajectory, benefiting from continued traction in its e-commerce platform, favorable product mix and improving customer demand. Ongoing investments in digital capabilities and inventory availability are likely to have supported the segment's performance in the fiscal fourth quarter.

Strength across the Electronic Components and Farnell businesses is expected to have driven Avnet's overall top-line performance in the to-be-reported quarter.

Momentum in AI-related infrastructure spending, data center deployments and industrial automation is likely to have remained a key growth driver during the quarter. Increasing design activity, higher book-to-bill ratios and expanding demand creation opportunities are expected to have supported order growth, while disciplined inventory management and operating leverage are likely to have aided profitability.

However, lingering macroeconomic uncertainty, geopolitical tensions and foreign exchange headwinds could have weighed on customer spending in certain end markets. Additionally, the pass-through nature of higher component pricing, particularly in memory, might have limited margin expansion despite supporting revenue growth in the fiscal fourth quarter.

AVT’s Price Performance, Valuation and Estimates

Avnet shares have soared 85.8% in the year-to-date period, outperforming the Zacks Electronics - Parts Distribution industry’s 61.4% growth.

AVT YTD Performance Chart

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Despite this outperformance, AVT stock is trading at a price-to-sales multiple of 0.25X, which is below the P/S multiple of industry’s P/S multiple of 0.39X. The undervaluation is further substantiated by Zacks Value Score of B.

AVT Forward 12-Month (P/S) Valuation Chart

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AVT Stock’s Investment Thesis

Avnet is benefiting from strong demand in AI infrastructure, networking and industrial markets. In the third quarter of fiscal 2026, the company reported revenues of $7.1 billion, up 34% year over year and 13% sequentially. Avnet’s networking and industrial markets were the biggest growth drivers during the third quarter. AI-related demand is becoming a larger part of AVT’s business. In the third quarter of fiscal 2026, management stated that the company’s direct exposure to AI and data center customers has increased from around 5-7% previously to nearly 10-15% now. Most of this business is tied to Asia, especially Taiwan, where demand from hyperscalers and server customers remains strong. The company is also benefiting from demand for components that support AI infrastructure.

AI buildouts are increasing demand for products tied to power management, cooling systems, connectors, capacitors, resistors and sensors. This helped AVT’s interconnect, passive and electromechanical (IP&E) business grow 25% year over year in the quarter. AI accelerators require surrounding IP&E products, creating additional sales opportunities beyond semiconductors. Growing backlog levels and book-to-bill ratios supported by rising lead times across several component categories benefit AVT. Despite higher volumes, Avnet’s gross profit margin was 10.4% in the third quarter of fiscal 2026, down 70 basis points from the year-ago quarter, reflecting a higher mix of Asia sales and product/customer mix shifts in the Western regions. A large portion of the sales growth involved costly memory products.

Avnet operates in a competitive technology distribution market where it competes with global component distributors as well as broader IT distributors, including Arrow Electronics ARW, TD SYNNEX SNX and CDW CDW. However, the company has created a niche for itself which helps to protect its margins. As AI infrastructure spending accelerates, these companies are expected to compete for a larger share of enterprise IT spending. Avnet delivered record sales of $6.67 billion in its Electronic Components business, which increased 34.7% year over year. Avnet is entering an upcycle with demand improving across data center and AI builds, industrial, networking and aerospace/defense, driving better sales execution and operating margin expansion.

Arrow Electronics competes head-to-head with Avnet in electronic component distribution, semiconductor supply, embedded computing and engineering services. Both Arrow Electronics and Avnet serve OEMs, industrial manufacturers, automotive suppliers, communications equipment vendors, and data center customers. Avnet comes at a crossroads with CDW and TD SYNNEX as they form part of the AI infrastructure value chain. Avnet plays its role much earlier in the technology value chain by supplying electronic components directly to equipment manufacturers, making the overlap minimal with CDW and TD SYNNEX.

Conclusion: Hold AVT Stock Now

Avnet is well-positioned to benefit from the ongoing semiconductor upcycle, driven by robust AI infrastructure investments, improving industrial and networking demand, and strengthening order trends. Rising backlog levels, higher book-to-bill ratios and continued Farnell recovery provide additional support for growth. Although margin expansion could remain constrained by memory pricing dynamics, product mix shifts and macroeconomic uncertainties, sustained demand across key end markets makes AVT stock worth retaining.

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This article originally published on Zacks Investment Research (zacks.com).

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