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Arrow Electronics, Inc. (ARW)
:ARW
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Arrow Electronics
(NYSE:ARW)66Neutral
Positive Factors
IT Spending Recovery
The ECS segment could benefit from a recovery in IT spending and showed strength in hybrid cloud solutions and infrastructure software.
Negative Factors
Financial Performance
Revenue and earnings guidance for the upcoming quarter are significantly below expectations, impacting the stock's performance.
Stock Rating
The timing of recovery remains unclear, leading to a downgrade in the stock rating to Underperform.
Arrow Electronics (ARW) vs. S&P 500 (SPY)
Market Cap
$5.52B
Dividend YieldN/A
Average Volume (3M)550.28K
Price to Earnings (P/E)15.0
Beta (1Y)0.92
Revenue Growth-15.66%
EPS Growth-54.03%
CountryUS
Employees21,520
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)7.28
Shares Outstanding52,172,302
10 Day Avg. Volume522,605
30 Day Avg. Volume550,283
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.20
Price to Cash Flow (P/CF)4.20
P/FCF Ratio3.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$105.00Price Target Upside-3.97% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering3
Arrow Electronics Business Overview & Revenue Model
Company DescriptionArrow Electronics, Inc. (ARW) is a global provider of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Operating in the technology sector, the company offers a broad range of offerings, including electronic components, computer products, and information technology services. Arrow Electronics serves various markets such as telecommunications, automotive, aerospace, and consumer electronics.
How the Company Makes MoneyArrow Electronics makes money by acting as an intermediary between technology manufacturers and end-users. It generates revenue through the distribution of electronic components and enterprise computing solutions. The company sources products from a wide array of suppliers and sells them to a diverse customer base, including original equipment manufacturers, contract manufacturers, and commercial customers. Additionally, Arrow Electronics offers value-added services such as design engineering, supply chain management, and logistics support, further enhancing its revenue streams. Strategic partnerships with leading technology manufacturers and a broad network of suppliers and customers contribute significantly to the company's earnings.
Arrow Electronics Financial Statement Overview
Summary
Arrow Electronics demonstrates a stable but unremarkable financial performance. While the company maintains a balanced leverage and strong cash flow position, it faces challenges in revenue growth and profitability. The financial health is adequate, but there are opportunities for enhancing margins and boosting top-line growth.Income Statement
Arrow Electronics shows a mixed performance in its income statement. While the company has a moderate gross profit margin of approximately 11.34% in the TTM, its net profit margin is relatively low at 1.4%. Revenue has declined by 15.64% from the previous year, indicating challenges in top-line growth. EBIT and EBITDA margins are also moderate at 3.07% and 3.23% respectively, suggesting room for improvement in operational efficiency.65
Positive
Balance Sheet
The balance sheet analysis reveals a stable financial position with a debt-to-equity ratio of 0.54, indicating a balanced leverage profile. The equity ratio stands at 26.48%, showing a moderate level of equity financing. Return on equity is low at 6.8%, which suggests limited profitability relative to equity.70
Positive
Cash Flow
Cash flow analysis highlights a strong free cash flow growth of 70.37% in the TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio is 2.88, suggesting healthy cash flow generation relative to earnings. The free cash flow to net income ratio is robust at 2.70, showcasing efficient cash conversion.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 27.92B | 33.11B | 37.12B | 34.48B | 28.67B | Gross Profit |
| 3.29B | 4.15B | 4.84B | 4.20B | 3.19B | EBIT |
| 768.56M | 1.47B | 2.07B | 1.56B | 894.51M | EBITDA |
| 922.15M | 1.67B | 2.26B | 1.78B | 1.10B | Net Income Common Stockholders |
| 392.07M | 903.50M | 1.43B | 1.11B | 584.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 188.81M | 218.05M | 176.91M | 222.19M | 373.62M | Total Assets |
| 21.76B | 21.73B | 21.76B | 19.54B | 17.05B | Total Debt |
| 3.12B | 3.81B | 3.77B | 2.63B | 2.26B | Net Debt |
| 2.93B | 3.59B | 3.60B | 2.40B | 1.88B | Total Liabilities |
| 15.93B | 15.85B | 16.15B | 14.19B | 11.90B | Stockholders Equity |
| 5.76B | 5.81B | 5.55B | 5.28B | 5.09B |
| Cash Flow | Free Cash Flow | |||
| 1.13B | 622.16M | -111.91M | 335.93M | 1.24B | Operating Cash Flow |
| 1.13B | 705.45M | -33.08M | 418.98M | 1.36B | Investing Cash Flow |
| -94.44M | -72.32M | -57.71M | -60.12M | -138.79M | Financing Cash Flow |
| -956.83M | -666.22M | 109.78M | -463.30M | -1.23B |
Arrow Electronics Technical Analysis
Negative
109.34
Price Trends
112.40
Negative
118.00
Negative
122.92
Negative
Market Momentum
-2.04
Positive
36.10
Neutral
19.32
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARW, the sentiment is Negative. The current price of 109.34 is above the 20-day moving average (MA) of 108.63, below the 50-day MA of 112.40, and below the 200-day MA of 122.92, indicating a bearish trend. The MACD of -2.04 indicates Positive momentum. The RSI at 36.10 is Neutral, neither overbought nor oversold. The STOCH value of 19.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARW.
Arrow Electronics Risk Analysis
Arrow Electronics disclosed 25 risk factors in its most recent earnings report. Arrow Electronics reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arrow Electronics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.22B | 16.72 | 8.42% | 1.23% | 1.56% | 18.79% | |
70 Outperform | $8.35B | 13.12 | 14.34% | 0.96% | -2.53% | -4.03% | |
68 Neutral | $4.25B | 13.91 | 6.45% | 2.61% | -12.21% | -51.31% | |
67 Neutral | $24.81B | 9.89 | 11.21% | 2.90% | 3.30% | 25.00% | |
66 Neutral | $5.52B | 15.03 | 6.78% | ― | -15.66% | -54.03% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
49 Neutral | $94.98M | ― | -56.63% | ― | -100.00% | -24.28% |
* Technology Sector Average
Performance Comparison
ARW
Arrow Electronics
109.34
-11.53
-9.54%
AVT
Avnet
50.44
4.71
10.30%
SNX
TD SYNNEX Corporation
129.32
26.38
25.63%
WCC
Wesco International
165.27
9.30
5.96%
HPE
Hewlett Packard Enterprise
15.81
-1.75
-9.97%
ANIX
Anixa Biosciences
2.84
-0.39
-12.07%
Arrow Electronics Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -4.85% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mix of positive achievements and ongoing challenges. While the company exceeded financial expectations and showed growth in the ECS segment, it continues to face difficulties in the global components sector and macroeconomic challenges. The stabilization of inventory and cash flow management are positive indicators, although foreign exchange impacts remain a concern.Highlights
Exceeded Financial Expectations
Fourth quarter sales reached $7.3 billion, surpassing the high end of guided ranges. Non-GAAP earnings per share were $2.97, also above expectations.
Enterprise Computing Solutions Growth
ECS sales were $2.5 billion, 12% higher than the previous year, with ECS billings growing 10% year-over-year.
Cash Flow and Inventory Management
Cash flow from operations was $326 million in Q4, and $1.1 billion for the full year. Inventory levels reduced by $1.1 billion from their peak five quarters prior.
Stable Book-to-Bill Ratio
The book-to-bill ratio is nearing parity globally, indicating stabilization.
Positive Outlook for ECS in 2025
Encouraged by supplier and customer base expansion efforts, increased adoption of ArrowSphere, and recurring revenue growth.
Lowlights
Global Components Sales Decline
Global component sales were down 3% versus the prior quarter and 7% year-over-year.
Challenging Market Conditions
Continued softness across automotive and consumer segments, with EMEA revenue experiencing a decline aligned with seasonal norms.
Foreign Exchange Impact
Changes in foreign exchange rates reduced reported revenue by approximately 100 basis points in Q4 and are expected to decrease reported sales by 200 basis points in Q1 2025.
Operating Expenses Growth
Fourth quarter non-GAAP operating expenses grew $12 million sequentially.
Company Guidance
During the Arrow Electronics fourth quarter 2024 earnings call, the company reported a strong performance, with total sales reaching $7.3 billion, surpassing the high end of their guidance range. Non-GAAP earnings per share were $2.97, also exceeding expectations. The global components segment generated $4.8 billion in sales, while the enterprise computing solutions (ECS) segment contributed $2.5 billion, marking a 12% increase year-over-year. Despite a challenging macroeconomic environment, Arrow witnessed sequential improvements in industrial markets and maintained stability in gross margins, with a consolidated non-GAAP gross margin of 11.7%. The company also achieved a book-to-bill ratio near parity, signaling stabilization in the industry. Looking ahead, Arrow provided guidance for the first quarter of 2025, expecting sales between $5.98 billion and $6.58 billion, with non-GAAP diluted earnings per share projected to be between $1.30 and $1.50. The company remains cautiously optimistic about an improving trajectory throughout the year, supported by declining inventory levels and expansion efforts in their supplier and customer bases.Arrow Electronics Corporate Events
Executive/Board ChangesRegulatory Filings and Compliance
Arrow Electronics Enhances Board and Updates Governance
Neutral
Dec 12, 2024
Arrow Electronics has expanded its board of directors by appointing Lawrence Chen, a seasoned executive with extensive experience in wireless, video, and AI technologies, to serve as an independent director and member of the board’s audit committee. Additionally, the company has filed a restated certificate of incorporation that removes outdated stock series and updates the company’s registered details, reflecting an effort to streamline its corporate structure and governance.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.