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Avnet, Inc. (NASDAQ:AVT), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$55.80 at one point, and dropping to the lows of US$49.75. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Avnet's current trading price of US$51.21 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Avnet’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Avnet
Is Avnet Still Cheap?
Great news for investors – Avnet is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Avnet’s ratio of 13.94x is below its peer average of 23.86x, which indicates the stock is trading at a lower price compared to the Electronic industry. What’s more interesting is that, Avnet’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Avnet?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Avnet, it is expected to deliver a relatively unexciting earnings growth of 8.4%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Avnet, at least in the near term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since AVT is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on AVT for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy AVT. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.