Avnet sells finished machines now, and still trades at 8 times earnings while Arrow gets 14
Two October 26 agreements, an EMEA-wide pact with Teltonika Networks and an AI edge device with Octonion, push the century-old component distributor past selling parts, days before a November 4 report that must show whether its debt-financed inventory turns into cash.
Vincent Jiang · 3 min read
Two agreements landed on October 26, and both sell something Avnet−6.28% — Avnet, down 6.28 percent today, the parts distributor born on Manhattan's Radio Row in 1921 1, has mostly left to its customers: finished machines. Avnet Silica, its European semiconductor division, signed an EMEA-wide master distribution agreement with Teltonika Networks, a Lithuanian maker of industrial routers, gateways and switches, after five years of cooperation limited to selected European markets 2.
The same day, Avnet and Octonion, a Swiss internet-of-things software firm, announced SmartEdge Agile, an edge device built on an STMicroelectronics−6.64% — STMicroelectronics, down 6.64 percent today STM32 microcontroller, running Octonion's Brainium AI software, with low-power LTE-M cellular connectivity developed with Orange on Sequans'−0.09% — Sequans, down 0.09 percent as of its last quote Monarch chip 3.
The margin is in the attach
For a component distributor, the money is in what attaches: hardware, software and connectivity sold as one working unit earn more per design win than chips alone. Lou Lutostanski, Avnet's global vice president for IoT, says most industrial IoT projects spend 18 to 24 months in prototype; Avnet claims its Meta−0.52% — Meta, down 0.52 percent today-Sensing approach cuts that to 6 to 8 months 3.
Teltonika's gear arrives certified, with a remote management platform, Avnet Silica's 200-plus application engineers behind it and a joint pledge by the two companies to fund inventory across EMEA 2. The clock is short: first-quarter fiscal 2027 results land on November 4, before the market opens 45.
Avnet's June-quarter revenue hit a record $8.3 billion, up 48 percent in a year
Data
| Quarterly revenue | |
|---|---|
| Q3 '23 | $6.34B |
| Q4 '23 | $6.21B |
| Q1 '24 | $5.65B |
| Q2 '24 | $5.56B |
| Q3 '24 | $5.6B |
| Q4 '24 | $5.66B |
| Q1 '25 | $5.32B |
| Q2 '25 | $5.62B |
| Q3 '25 | $5.9B |
| Q4 '25 | $6.32B |
| Q1 '26 | $7.12B |
| Q2 '26 | $8.3B |
Record revenue, negative cash
The June quarter, Avnet's fiscal fourth, brought record sales of $8.3 billion, up 48 percent year on year 67, and adjusted earnings of $2.28 a share, up 182 percent 7. The filings also carry the reason the stock stays cheap: operating cash flow of minus $291 million for the quarter and debt of $3.48 billion 6, the numbers behind the October 13 expansion of the revolving credit line to $2.75 billion 8, which The Inference reported at the time.
Arrow gets 14 times earnings on 26 percent growth; Avnet gets 8 on 48 percent
Data
| Value | |
|---|---|
| Avnet, trailing (30 Oct) | 8.15x |
| Arrow, TTM (27 Oct) | 13.91x |
| Arrow 5-yr median | 9.96x |
The gap the deals must close
Arrow Electronics−7.28% — Arrow Electronics, down 7.28 percent today, Avnet's closest US rival (called the cheapest of the four big US distributors here on October 20), grew revenue 26 percent and trades at 13.91 times trailing earnings, 31.9 percent above one valuation model's fair-value estimate; its insiders sold $14.6 million of stock over twelve months and bought $0.6 million 9. Avnet grew 48 percent and trades at 8.15 times trailing earnings, or 6.71 times EV/EBITDA 7. The market pays Arrow for growth and prices Avnet as a cash-conversion risk.
What the releases do not say
Neither agreement carries a revenue, volume or margin figure, and Octonion chief Cédric Mangaud's claim that Brainium is "already proven effective in the sports industry" is a thin résumé for factory floors 3. The next readings arrive in order: operating cash flow and short-term borrowings in the November 4 release 4, then the public preview of SmartEdge Agile at the electronica trade show in Munich in mid-November 3. Arrow gets paid for growth; Avnet gets a week to prove growth pays.
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