September 7th, 2010
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Posts Tagged ‘AVT’
‘Distribution’ – Good for Your Wealth
July 7th, 2010
9 comments
Three of the world’s top wholesale distributors of electronic components are going for peanuts due to the market sell-off since April. All of them have been posting exceptionally good quarterly numbers and analysts have been raising estimates. Each of these fine companies has a current P/E well below its own historical median and at a single digit absolute level.
The firms are Avnet, Arrow Electronics and Ingram Micro.
Here is the supporting data:
|
Ticker/July 6 Close |
Calendar 2009 EPS |
Calendar 2010 EPS* |
Expected Growth |
Normalized P/E |
2010 P/E |
% Below 2010 High |
|
AVT / $23.76 |
$1.72 |
$3.07 |
78.4% |
12.5x |
7.8x |
30.3% |
|
ARW / $22.01 |
$1.68 |
$3.22 |
91.6% |
12.4x |
6.8x |
32.3% |
|
IM / $14.91 |
$1.33 |
$1.85 |
39.1% |
12.0x |
8.1x |
21.5% |
|
* Avnet is on a June FY but data is adjusted for calendar years - 2010 data includes estimates |
||||||
Distribution is a low margin business but these companies put up some large top lines. Here are the numbers from 2009 and their CY 2010 estimates.
|
Company |
2009 Revenues |
2010 Revenues |
LT Debt as % of Capital |
|
AVT |
$16.1 billion |
$20.1 billion |
24% |
|
ARW |
$14.7 billion |
$17.5 billion |
30% |
|
IM |
$29.5 billion |
$33.7 billion |
8% |
With nothing but good news I’m using the (hopefully) temporary share price weakness to add to positions.
Disclosure: Author is long AVT,ARW and IM shares and short AVT, ARW and IM options.
‘Distribution’ of Wealth – Avnet, Inc.
December 8th, 2008
5 comments
Avnet [NYSE:AVT] Dec. 5, 2008 price: $15.01
52-week range: $11.88 (Nov. 21, 2008) - $37.69 (Dec. 11, 2007)
Avnet is the second largest distributor of semiconductors and computer peripherals in the world. [Ingram Micro is #1]. FY 2008 (ended June 2008) saw record sales of $17.95 billion and record EPS of $3.18 but the current FY is likely to see a drop to about $2.44 - $2.56 due to the worldwide economic slump.
Even so, the decline in Avnet’s share price from $37.69 last December to today’s $15.01 makes this look like a great time to get invested in this well run company. The shares now trade at just 6x the already reduced consensus estimates for this year and next. Typically AVT commands between 10 – 15 times normalized earnings.
Book value was $27.50/share as of June 30 and Avnet management has been using the worldwide slowdown to make complimentary acquisitions for their long-term growth while prices are favorable.
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