Avnet (NASDAQ:AVT) Reports Bullish Q2 CY2026, Stock Soars

Electronic components distributor Avnet (NASDAQGS:AVT) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 47.7% year on year to $8.30 billion. On top of that, next quarter’s revenue guidance ($9.15 billion at the midpoint) was surprisingly good and 18.7% above what analysts were expecting. Its non-GAAP profit of $2.28 per share was 28.8% above analysts’ consensus estimates.

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Company Overview

With a century-long history of adapting to technological evolution, Avnet (NASDAQ:AVT) is a global electronic components distributor that connects manufacturers of semiconductors and other electronic parts with businesses that need these components.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $27.63 billion in revenue over the past 12 months, Avnet is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.

As you can see below, Avnet’s sales grew at a solid 7.2% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Avnet’s annualized revenue growth of 7.8% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

This quarter, Avnet reported magnificent year-on-year revenue growth of 47.7%, and its $8.30 billion of revenue beat Wall Street’s estimates by 10.5%. Company management is currently guiding for a 55.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11.5% over the next 12 months, an improvement versus the last two years. This projection is particularly noteworthy for a company of its scale and indicates its newer products and services will catalyze better top-line performance.

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Adjusted Operating Margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

Avnet was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 3.6% was weak for a business services business.

Analyzing the trend in its profitability, Avnet’s adjusted operating margin decreased by 1.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Avnet’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q2, Avnet generated an adjusted operating margin profit margin of 2.8%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Avnet’s EPS grew at 15.9% compounded annual growth rate over the last five years, higher than its 7.2% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its adjusted operating margin didn’t improve.

We can take a deeper look into Avnet’s earnings to better understand the drivers of its performance. A five-year view shows that Avnet has repurchased its stock, shrinking its share count by 15.8%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Avnet, its two-year annual EPS growth of 3% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, Avnet reported adjusted EPS of $2.28, up from $0.81 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Avnet’s full-year EPS to grow 39.5% from $5.65 to $7.88.

Key Takeaways from Avnet’s Q2 Results

It was good to see Avnet beat analysts’ EPS expectations this quarter. We were also excited its EPS guidance for next quarter outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 6.5% to $98.50 immediately following the results.

Avnet may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).