Is Avnet Stock Halal?

June 2, 2022

Table of Contents

Summary

After examining Avnet’s source of revenue, the ratio of interest expense to total operating expense, and ESG impact we are comfortable investing in Avnet, Inc. from a Halal perspective.

Company Overview

Avnet, Inc. is a distributor of electronic components headquartered in Phoenix, Arizona. The company is considered one of the world’s largest distributors of electronic components and embedded solutions.

How much of Avnet, Inc’s revenue comes from haram?

The majority of Avnet, Inc.’s revenue is from selling semiconductors. The remaining revenue comes from selling other electrical products including Interconnect, passive and electromechanical (IP&E) products.

Practical Islamic finance concludes

None of Avnet, Inc’s. revenue comes from anything inherently haram.

Does Avnet, Inc. rely on interest to operate?

	Recent Quarter ended 04/02/2022	Fiscal Year ended 07/03/2021	Fiscal Year ended 06/27/2020
Interest Expense	25,914	89,473	122,742
Total Operating Expense	512,364	1,874,831	1,842,122
Interest Expense / Total Operating Expense	5.05%	4.77%	6.66%

*Numbers in thousands of U.S. dollars

Practical Islamic finance concludes:

Riba is used but not relied upon in Avnet, Inc’s operations. It should be noted that Avnet, Inc. decreased its interest expenses in 2021 and 2020 by 27.1% and 9.0% respectively. This was after a dramatic increase of 45.4% in 2019 in which its interest expense/operating expense ratio was 7.2%. In 2018, the interest expense/operating expense ratio was 5.2%.

The significant increase in 2019 in the company’s reliance on interest to operate does seem to be an aberration. Thus, it can be concluded that the company normally does not rely on interest to operate. However, this would be something to keep an eye on in the future.

What is Avnet’s Environmental, Social, and Governance (ESG) impact?

Environment

Avnet, Inc. has focused on cutting its greenhouse gas emissions and transitioning to renewable energy wherever possible. The company issues yearly sustainability reports detailing the progress made towards goals set in previous years. Avnet, Inc. has set ambitious goals to increase their renewable energy by 30% and have a 50% reduction in GHG emissions by the year 2025.

Social

Avnet, Inc. has a Glassdoor rating of 4.0 out of 5. Glassdoor is a trusted website where current and former employees can review and rate their companies. The company also details steps being taken to increase their positive social impact in their annual sustainability report.