Value
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.7 |
| P/S | 10.0 |
| EV/EBITDA | 3.8 |
| Fwd P/E | 9.1 |
| PEG | 7.7 |
| Analyst target | 3.0 |
- ▸Forward P/E: 11.4x
- ▸PEG: 0.88
AVT · Why this verdict
Why Avnet (AVT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
While the company has beaten earnings for four consecutive quarters and posted 34% revenue growth, poor free cash flow conversion at 42% of net income and quality metrics below the minimum acceptable floor combine with a reward-to-risk ratio of 0.19-to-1 to make the current price unattractive.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue growing at 34% year-over-year is a material top-line expansion that partially offsets quality concerns and could drive the FCF-to-net-income ratio toward recovery if operating leverage materializes. Growth breakdown | Revenue growth remains above 15% year-over-year for 2 consecutive quarters and free cash flow conversion rises alongside it, validating that top-line growth is translating to cash. | →Stable |
| CounterStrong reported revenue growth in distribution can mask thin underlying economics; if growth is driven by lower-margin product mix or pass-through pricing rather than volume, the quality gap may persist regardless of the top-line trajectory. | ||
Free cash flow converting at only 42% of net income is a significant divergence that flags earnings quality and raises questions about the sustainability and reliability of reported profits. Quality breakdown | Free cash flow conversion rises above 80% of net income for 2 consecutive quarters, demonstrating that reported earnings are translating into actual cash generation. | →Stable |
| CounterLow FCF-to-net-income ratios in distribution businesses can reflect working capital investment to support revenue growth rather than structural earnings quality problems; if growth subsequently normalizes, cash conversion may recover on its own. | ||
Four consecutive earnings beats averaging nearly 10% above estimates demonstrate solid near-term execution, but the underlying business quality remains below the minimum investable threshold, limiting how much weight this streak alone can support. Earnings | Quality score rises above 5.0 for 2 consecutive quarters, demonstrating that the earnings delivery is backed by improving business fundamentals rather than transitory factors. | →Stable |
| CounterA persistent and material beat streak — averaging 10% above estimates across four quarters — can itself be evidence of a more durable quality improvement that lags quantitative scoring updates. | ||
Just 1.3% of headroom remains to the price target with a reward-to-risk ratio of 0.19-to-1, indicating the stock is priced at or near full value and offers inadequate reward for accepting the downside risk. Price targets | A price decline restores upside to the take-profit level beyond 12%, creating room for a constructive re-entry with a more favorable reward-to-risk ratio. | →Stable |
| CounterAnalyst price targets in distribution businesses are often conservative; if earnings revisions move targets higher, the apparent full valuation could be a temporary read on a still-improving story. | ||
Revenue growing at 34% year-over-year is a material top-line expansion that partially offsets quality concerns and could drive the FCF-to-net-income ratio toward recovery if operating leverage materializes.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 15% year-over-year for 2 consecutive quarters and free cash flow conversion rises alongside it, validating that top-line growth is translating to cash.
CounterStrong reported revenue growth in distribution can mask thin underlying economics; if growth is driven by lower-margin product mix or pass-through pricing rather than volume, the quality gap may persist regardless of the top-line trajectory.
Free cash flow converting at only 42% of net income is a significant divergence that flags earnings quality and raises questions about the sustainability and reliability of reported profits.
→StableQuality breakdown
- Expectation
- Free cash flow conversion rises above 80% of net income for 2 consecutive quarters, demonstrating that reported earnings are translating into actual cash generation.
CounterLow FCF-to-net-income ratios in distribution businesses can reflect working capital investment to support revenue growth rather than structural earnings quality problems; if growth subsequently normalizes, cash conversion may recover on its own.
Four consecutive earnings beats averaging nearly 10% above estimates demonstrate solid near-term execution, but the underlying business quality remains below the minimum investable threshold, limiting how much weight this streak alone can support.
→StableEarnings
- Expectation
- Quality score rises above 5.0 for 2 consecutive quarters, demonstrating that the earnings delivery is backed by improving business fundamentals rather than transitory factors.
CounterA persistent and material beat streak — averaging 10% above estimates across four quarters — can itself be evidence of a more durable quality improvement that lags quantitative scoring updates.
Just 1.3% of headroom remains to the price target with a reward-to-risk ratio of 0.19-to-1, indicating the stock is priced at or near full value and offers inadequate reward for accepting the downside risk.
→StablePrice targets
- Expectation
- A price decline restores upside to the take-profit level beyond 12%, creating room for a constructive re-entry with a more favorable reward-to-risk ratio.
CounterAnalyst price targets in distribution businesses are often conservative; if earnings revisions move targets higher, the apparent full valuation could be a temporary read on a still-improving story.
Per-dimension breakdown
Quality
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.4 |
| ROA | 2.3 |
| Gross margin | 0.0 |
| Op margin | 1.2 |
| Net margin | 0.4 |
| Current ratio | 7.0 |
| FCF quality | 3.3 |
| Moat | 5.6 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: 42% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
7.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 4.6 |
- ▸Strong growth: 34% YoY
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 5.2 |
- ▸Uptrend pullback (RSI 40) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.1 |
| erm sentiment | 6.3 |
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Modest insider selling — $3,006,566 (0.041% of mkt cap)
Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.0 |
| quality rank | 0.0 |
| growth rank | 6.0 |
Technical
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.8 |
| support resistance | 5.5 |
| 52w position | 8.6 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.4 |
| days to cover | 6.0 |
| volatility | 3.5 |
| put call | 10.0 |
| implied vol | 4.7 |
| max pain risk | 3.0 |
| beta | 6.5 |
| debt equity | 7.2 |
- ▸Above max pain $60
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.4 |
| dividend safety | 4.8 |
- ▸Perfect beat streak: 4Q
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.0=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.99
Upside
-14.3%
Downside
7.2%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Growth at 7.3 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-2.0=NEGATIVE.
The strongest dimensions are Growth at 7.3, Catalyst at 6.7, and Technical at 6.6; the weakest are Quality at 3.2, Peer rank at 3.8, and Insider at 3.8. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -1.99 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Free cash flow converting at only 42% of net income is a significant divergence that flags earnings quality and raises questions about the sustainability and reliability of reported profits.
Trip ifFree cash flow conversion rises above 80% of net income for 2 consecutive quarters, falsifying the poor-conversion thesis.
- P2Four consecutive earnings beats averaging nearly 10% above estimates demonstrate solid near-term execution, but the underlying business quality remains below the minimum investable threshold, limiting how much weight this streak alone can support.
Trip ifQuality score rises above 5.0 for 2 consecutive quarters, demonstrating the quality floor has been cleared.
- P3Just 1.3% of headroom remains to the price target with a reward-to-risk ratio of 0.19-to-1, indicating the stock is priced at or near full value and offers inadequate reward for accepting the downside risk.
Trip ifUpside to the take-profit level expands beyond 12% as price declines, restoring a reward-to-risk ratio above 1.0-to-1.
- P4Revenue growing at 34% year-over-year is a material top-line expansion that partially offsets quality concerns and could drive the FCF-to-net-income ratio toward recovery if operating leverage materializes.
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters, falsifying the strong top-line expansion thesis.