Arrow Electronics Updates 1 Key New Risk Factor

Shares of electronic components and enterprise computing solutions provider Arrow Electronics, Inc. (ARW) have declined 11.1% so far this year amid the global macro uncertainty. Recently, ARW delivered a better-than-estimated fourth-quarter performance on both top-line and bottom-line fronts.

Buoyed by double-digit growth in the Global Components vertical coupled with favorable pricing, revenue increased 6.6% year-over-year to $9 billion, beating analysts’ expectations by $100.6 million. Earnings per share at $5.37, came in ahead of the Street’s consensus by $0.93.

Sales in the company’s Global Enterprise Computing Solutions vertical, on the other hand, witnessed an 8% decrease during this period.

Looking ahead to Q1, the company anticipates sales in the range of $8.35 billion and $8.95 billion. Earnings per share are expected to land between $4.44 and $4.60.

With these developments in mind, let us take a look at the changes in ARW’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, Arrow Electronics’ top risk category is Finance & Corporate, contributing 6 of the total 23 risks identified for the stock, compared to a sector average of 16 risk factors under the same category.

In its recent report, the company has added one key risk factor under the Finance & Corporate risk category.

ARW highlighted that a diverse set of factors including, certain U.S. and international tax policy and enforcement efforts, OECD’s Base Erosion and Profit Shifting Project, changes in the mix of earnings among countries with differing tax rates, and the proposed 15% global minimum tax rate may negatively impact ARW’s effective tax rate.

ARW noted that such tax changes could mean higher effective tax rates in many of the countries where it operates and ultimately negatively impact the company’s overall tax liability.

Hedge Fund Activity

TipRanks data points that Wall Street’s top hedge funds have increased holdings in Arrow Electronics by 29.6 thousand shares in the last quarter, indicating a positive hedge fund confidence signal in the stock based on activities of 8 hedge funds. Importantly, George Davis Jr’s Hotchkis & Wiley Capital Management has a holding worth $73.5 million in ARW.

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