Earnings roundup: Avnet quarterly results exceed Wall Street expectations
Carvana Co.’s stock rocketed to a nearly three-year high in after hours trading on Wednesday after the Tempe-based used car retailer reported third quarter financial results that exceeded Wall Street expectations.
Meanwhile, Avnet Inc., Arizona’s largest public company, also saw its shares move sharply higher on solid quarterly results.
Carvana (Nasdaq: CVNA) reported net income of $148 million and revenue of $3.6 billion, up 5.3% from the prior year quarter and topping Wall Street analysts’ projections of $3.4 billion.
The company reported record-breaking adjusted EBITDA — or earnings before interest, taxes, depreciation and amortization — of $429 million, which also exceeded the Wall Street consensus of $336 million.
“And these profitability records have to be viewed in a very important context: they were achieved while growing at 34% year-over-year by a company that currently has just 1% market share,” Carvana CEO Ernie Garcia wrote in a letter to shareholders. “The machine we have built is fundamentally differentiated and the result is an opportunity with few precedents. Most importantly, our customer experiences, our financial performance, and our pace of growth continue to separate us further from the pack in our industry. Today, we are the most profitable and fastest-growing automotive retailer and there is still much more to do.”
After Carvana released its results, the company’s shares soared 20% in after hours trading to $249. As of 1:30 p.m. PST, Carvana’s shares were trading at $250.05, a new 52-week high and the highest level since Dec. 14, 2021, when the price reached $259.99, according to data from Yahoo Finance.
Carvana’s stock had closed at $207.33 a share Wednesday before the Q3 results were released.
Carvana is focusing on increasing inventory by ramping up production capacity as well as integrating the company’s inspection and reconditioning capabilities at its ADESA locations nationwide.
“Throughout the year, our inventory teams have been focused on increasing production output to better match demand and we made progress doing so in the third quarter,” Mark Jenkins, Carvana’s chief financial officer, said on the company’s earnings call Wednesday. “However, we still remain below our target available website inventory levels and returning to more optimal levels remains a key near-term focus.”
To date, the company has integrated IRC capabilities at ADESA sites in Las Vegas, Portland, Kansas City, Houston and Buffalo, New York with a sixth site soon to be announced, Garcia said.
Carvana’s IRC integrations at its ADESA sites required “minimal CapEx and approximately 90 days of lead time,” Garcia told investors and analysts on the earnings call.
In the past, building reconditioning centers took anywhere from one to three years, requiring significant CapEx, he added.
“Continuing this rollout over time will drive positive feedback in our business by reconditioning more cars,” he said. “By reconditioning more cars closer to our customers, this will improve unit economics through more efficient access to large pools of inventory, as well as lower inbound and outbound shipping distances and costs, and will provide customer experiences that are even better through greater selection and faster delivery.”
In the third quarter, Carvana reached a milestone of 2 million cars sold since it was founded in 2013.
Carvana’s maintained its previously announced guidance, which points to continued growth for the rest of the year. The company expects EBITDA between $1 billion and $1.2 billion for 2024, an increase from $339 million in 2023.
Asian market growth helps Avnet beat Wall Street expectations
Shares of Avnet Inc. rose nearly 6% on Wednesday after the Phoenix-based electronic components distributor’s quarterly financial results also exceeded Wall Street expectations.
Avnet (Nasdaq: AVT) generated $5.6 billion in revenue during its first fiscal quarter of 2025 that ended Sept. 28, compared with $6.3 billion in the prior year quarter.
The company reported adjusted earnings per share of 92 cents in its first fiscal quarter, down from $1.61 a share in the prior year, according to a regulatory filing.
Avnet’s results still exceeded its quarterly guidance and Wall Street expectations. Zacks Investment Research forecasted $5.41 billion in revenue and earnings per share of 85 cents.
Avnet CEO Phil Gallagher attributes the company’s positive quarterly results to a return to market growth in Asia, powered by strength in the server, data center and communication sectors.
The company reported a 6% year-over-year increase in sales in the Asia market, which is where cycle shifts historically begin, Gallagher said.
“While it is too early to call with any certainty at this point, we remain optimistic that the return to growth in Asia is a positive sign of things to come in the West,” he said.
The company continued to grapple with soft industrial and automotive markets in the U.S. as well as a decrease in sales for Farnell — a segment of Avnet’s business that distributes electronics components and industrial products — as it’s going through a transitional period with new leadership, Gallagher added.
“Despite uneven market conditions, our team continues to operate effectively, and I want to thank them for their execution and for maintaining collaborative relationships with our customers and suppliers,” Gallagher said. Their efforts position us well to capitalize on profitable growth opportunities as the market recovers.”
Avnet is forecasting revenue between $5.4 billion and $5.7 billion and earnings per share between 80 cents and 90 cents in the company’s second fiscal quarter of 2025.
Avnet’s stock closed at $57.69 a share on Wednesday, up 5.9%, but lost a bit of that momentum in after-hours trading.