Avnet surges on earnings beat, record Asia growth
EPS and revenue exceed expectations; Q3 guidance points to above-trend growth
Avnet shares climbed in early trading Tuesday after the global technology distributor reported second-quarter earnings that handily exceeded Wall Street expectations, driven by record performance in Asia and significant margin expansion in its Farnell division.
The Phoenix-based company reported adjusted diluted earnings per share of $1.15 on revenue of $6.3 billion for the quarter ended December 28, 2025, surpassing analyst consensus estimates of $0.95 in EPS and $6.03 billion in revenue, according to earnings coverage. Avnet's own guidance range had been $0.90 to $1.00 per share.
Chief Executive Phil Gallagher highlighted operational strength on the earnings call, noting that adjusted operating income grew two times faster than sales sequentially, demonstrating "expected leverage" in Avnet's business model, as reported.
The standout performance came from Avnet's Asia region, which achieved record sales of $3.2 billion, up 16.9% year-over-year. Meanwhile, Farnell's operating margins surged 367 basis points to 4.7%, reflecting improved efficiency and higher-margin product mix in the electronic components distribution business.
Avnet's forward guidance for the fiscal third quarter calls for sales between $6.20 billion and $6.50 billion and adjusted diluted EPS in the range of $1.20 to $1.30, implying above-trend growth, per the company's release. The company noted that seasonal factors including the Lunar New Year are expected to temper Asia's sequential growth.
Despite a cautious pre-earnings backdrop—analysts had a consensus "Reduce" rating with a median price target around $49.33 and had trimmed revenue estimates by roughly $550 million over the prior 90 days—the strong results drew attention. Following the release, sentiment readings were neutral, with some reports noting the significance of the beats relative to both consensus and guidance.
From a valuation standpoint, Avnet is trading at approximately 6.8 times forward earnings and below book value, with a price-to-book ratio of 0.85 and a 52-week range between $38.43 and $56.45, according to market data. These metrics suggest the market is still discounting the distributor's growth potential relative to peers.
In the competitive landscape, Arrow Electronics currently maintains a stronger financial profile and larger market share, with global sales of roughly $28 billion in 2024 versus Avnet's $22.2 billion in fiscal 2025, per industry data. The global electronic components distribution market is projected to reach about $448.4 billion in 2026, supported by demand from AI servers, automotive electronics, industrial automation, telecommunications infrastructure, and IoT devices.
Investors will be watching whether Avnet's margin momentum and Asia growth sustain in coming quarters, and whether the company can translate operational leverage into consistent earnings expansions. With Q3 guidance implying continued outperformance and valuation metrics that remain modest, the bar is set for Avnet to demonstrate that its momentum can endure beyond seasonal headwinds in Asia.