Electronic components distributor Avnet (NASDAQGS:AVT) reported calendar Q3 2026 (fiscal Q1 2027) results topping the market’s revenue expectations, with revenue up 81.7% year on year to $10.72 billion. In addition, next quarter’s revenue guidance ($11.25 billion at the midpoint) was surprisingly strong and 19.4% above analysts’ consensus estimates. Its non-GAAP profit of $3.63 per share was 26.8% above analysts’ consensus estimates.

For more on Avnet, read the full research report for free.

“We began fiscal 2027 by delivering another record quarter, reflecting stronger demand and solid execution across all of our businesses,” said Avnet Chief Executive Officer Phil Gallagher. “The fundamental backdrop for our industry remains positive, with continued growth across our core verticals such as industrial, aerospace and defense, transportation and AI and data center applications. Our team is diligently managing expenses and working capital while supporting significant and sustained demand. With momentum across our business, our outlook is robust, and we remain focused on executing our strategy, driving profitable growth and creating long-term value for our shareholders.”

Revenue growth

A company’s long-term revenue performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones sustain growth for years.

With $32.45 billion in revenue over the past 12 months, Avnet is a large company in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also gives it more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.

Avnet’s revenue grew at an impressive 9.7% compounded annual growth rate over the last five years. This shows Avnet’s demand was higher than that of many business services companies.

Long-term growth matters most, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Avnet’s annualized revenue growth of 18.7% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Avnet reported year-on-year revenue growth of 81.7%, and its $10.72 billion in revenue beat Wall Street’s consensus estimates by 16.2%. Management is guiding for a 78% year-on-year increase in revenue next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 16.3% over the next 12 months, according to S&P, a slight deceleration versus the last two years. Still, this projection is strong given its scale and implies the market is forecasting success for its products and services.

Adjusted operating margin

Avnet’s adjusted operating margin has been trending up over the last 12 months and averaged 3.8% over the last five years. Although its profitability is still poor, its strong revenue growth is giving it operating leverage as it scales. This could lead to higher long-term profits if it can keep expanding.

Analyzing the trend in its profitability, Avnet’s adjusted operating margin might have fluctuated slightly but has generally stayed the same 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.

This quarter, Avnet generated an adjusted operating margin of 4.6%, up 2.1 percentage points year on year. This increase was a positive development and shows it was more efficient.

Earnings per share

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

Avnet’s EPS grew at an 18.8% compounded annual growth rate over the last five years, higher than its 9.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

As with revenue, we analyze EPS over a shorter period to check for changes in the business.

For Avnet, its two-year annual EPS growth of 34.9% was higher than its five-year trend. That acceleration is a positive, especially given the already high base.

In Q3, Avnet reported adjusted EPS of $3.63, up from $0.84 in the same quarter last year. This result easily cleared analysts’ consensus estimates, a positive outcome for shareholders. Over the next 12 months, Wall Street expects Avnet’s full-year EPS to grow 32.3% from $8.44 to $11.17, according to S&P.

Key takeaways from Avnet’s Q3 results

Avnet delivered a solid quarter, with EPS beating analysts’ consensus estimates and next-quarter EPS guidance coming in well above Wall Street’s consensus. Shares rose 4.8% to $92.96 immediately after the report.

Avnet had a solid quarter, but looking at the bigger picture, is the stock a buy? The latest quarter matters, but longer-term business quality and valuation matter more when deciding whether to invest. For more on Avnet, read our full research report here (it’s free).