Arrow Electronics (ARW) AI Stock Analysis

• Market Cap: $5.78B
• Dividend Yield: N/A
• Average Volume (3M): 733.77K
• Price to Earnings (P/E): 15.3
• Beta (1Y): 0.99
• Revenue Growth: -15.66%
• EPS Growth: -54.03%
• Country: US
• Employees: 21,520
• Sector: Technology
• Sector Strength: 64
• Industry: Technology Distributors
• EPS (TTM): 7.28
• Shares Outstanding: 51,867,252
• 10 Day Avg. Volume: 670,473
• 30 Day Avg. Volume: 733,770
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.61
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 2.82
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $105.00
• Price Target Upside: -5.71% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 3

Arrow Electronics demonstrates a solid financial foundation with strong cash flow and balanced leverage, contributing to its stability. The technical analysis supports a positive outlook, but challenges in revenue growth and profitability temper enthusiasm. The reasonable valuation and mixed earnings call results align with a cautiously optimistic view, resulting in an overall score of 74.

Positive Factors

Cash Flow Growth

Despite a 4% increase in inventory, Arrow's cash flow grew to $326M due to a favorable move in accounts payable.

Cost Reduction Plan

Arrow reiterated its plan to reduce annualized net opex by $90M-$100M exiting C2026, with a third of these savings taking place in C2025.

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

Margins and Market Challenges

The company's components segment is facing weak margins due to challenges in the European market and certain end markets.

Revenue and Earnings Guidance

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 Business Overview & Revenue Model

Company Description

Arrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Global Components and Global Enterprise Computing Solutions. The Global Components segment markets and distributes semiconductor products and related services; passive, electro-mechanical, and interconnect products, including capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products, as well as other products and services. The Global Enterprise Computing Solutions segment offers computing solutions, such as datacenter, cloud, security, and analytics solutions. This segment provides access to various services, including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. The company serves original equipment manufacturers, value-added resellers, managed service providers, contract manufacturers, and other commercial customers. Arrow Electronics, Inc. was founded in 1935 and is based in Centennial, Colorado.

How the Company Makes Money

Arrow 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 111.36
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARW, the sentiment is Positive. The current price of 111.36 is above the 20-day moving average (MA) of 102.45, above the 50-day MA of 105.12, and below the 200-day MA of 118.53, indicating a neutral trend. The MACD of 2.17 indicates Negative momentum. The RSI at 61.97 is Neutral, neither overbought nor oversold. The STOCH value of 86.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARW.

Arrow Electronics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARW	74 Outperform	$5.78B	15.30	6.78%	―	-15.66%	-54.03%
CNXN	71 Outperform	$1.61B	18.88	9.94%	0.72%	-1.70%	4.45%
SCSC	71 Outperform	$774.06M	12.99	6.79%	―	-15.92%	-25.15%
AVT	70 Outperform	$4.06B	13.32	6.45%	2.54%	-12.21%	-51.31%
SNX	65 Neutral	$9.30B	13.85	8.40%	1.48%	4.62%	16.28%
NSIT	61 Neutral	$4.41B	21.19	14.24%	―	-5.17%	-9.73%
Sector *	59 Neutral	$10.65B	10.45	-6.56%	3.01%	7.31%	-12.18%

Arrow Electronics Corporate Events

Arrow Electronics Enhances Board and Updates Governance

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.