Arrow Electronics (ARW) AI Stock Analysis

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Arrow Electronics

(NYSE:ARW)

Rating:71Outperform

Price Target:―

Arrow Electronics displays a solid financial foundation and reasonable valuation, bolstered by strong cash flow management and positive earnings call outcomes. The stock shows upward technical momentum, though caution is advised due to potential overbought conditions. Despite challenges such as declining gross margins and tariff uncertainties, the company's ability to exceed guidance and maintain stability positions it well for future growth.

Positive Factors

Cash Flow

Arrow's cash flow grew to $326M due to a favorable move in accounts payable.

Earnings

ARW delivered year-over-year billings growth in the ECS segment.

Supply Chain

ARW's supply chain management and integration services were accretive to operating results.

Negative Factors

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.

Tariffs

Significant uncertainty remains with the potential impact of tariffs on end demand.

Arrow Electronics (ARW) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$6.22B

Dividend YieldN/A

Average Volume (3M)639.02K

Price to Earnings (P/E)16.5

Beta (1Y)0.98

Revenue Growth-11.13%

EPS Growth-43.00%

CountryUS

Employees21,520

SectorTechnology

Sector Strength77

IndustryTechnology Distributors

Share Statistics

EPS (TTM)1.80

Shares Outstanding51,873,985

10 Day Avg. Volume475,280

30 Day Avg. Volume639,016

Financial Highlights & Ratios

PEG Ratio-116.70

Price to Book (P/B)1.04

Price to Sales (P/S)0.00

P/FCF Ratio6.02

Enterprise Value/Market Cap1.40

Enterprise Value/Revenue0.08

Enterprise Value/Gross Profit2.79

Enterprise Value/Ebitda1.89

Forecast

1Y Price Target

$105.00

Price Target Upside-12.43% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering2

Arrow Electronics Business Overview & Revenue Model

Company DescriptionArrow 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 MoneyArrow Electronics makes money through the sale of electronic components and enterprise computing solutions. Its Global Components segment generates revenue by distributing electronic components to industrial and commercial customers, providing design, engineering, and supply chain services. The Global Enterprise Computing Solutions segment earns revenue by delivering enterprise computing products, services, and solutions to value-added resellers, managed service providers, and system integrators. Key revenue streams include the distribution of semiconductors and computing products, as well as the provision of supply chain management and logistics services. The company also forms strategic partnerships with leading technology manufacturers and suppliers, which enhances its product offerings and contributes significantly to its earnings.

Arrow Electronics Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: 7.68%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

Arrow Electronics demonstrated strong performance in exceeding sales and earnings guidance, with notable growth in the Enterprise Computing Solutions segment and improved book-to-bill ratios. However, challenges such as declining gross margins and the uncertain impact of tariffs pose risks to future performance.

Q1-2025 Updates

Positive Updates

Exceeded Guidance in Sales and Earnings

Arrow Electronics reported consolidated sales of $6.8 billion, exceeding their guidance range, and non-GAAP diluted EPS of $1.80, which was above the guided range.

Growth in Enterprise Computing Solutions

Enterprise Computing Solutions sales were $2 billion, 18% higher year-over-year, with billings growth of 5% compared to the same period last year.

Positive Book-to-Bill Ratios

Improved book-to-bill ratios throughout the quarter, now at or above parity in all three regions, indicating a potential cyclical turning point.

Strong Cash Flow and Inventory Management

Generated $352 million in cash flow from operations, marking the seventh consecutive quarter of positive cash flow generation. Inventory levels declined by over $1 billion from their peak.

Negative Updates

Decline in Gross Margin

Consolidated non-GAAP gross margin was 11.3%, down approximately 120 basis points versus the prior year, primarily due to overall mix in both global components and ECS.

Impact of Tariffs

Significant complexity and uncertainty due to tariffs, with potential 2-4% impact on global components sales not included in the guidance, adding risk to future performance.

Company Guidance

In the recent Arrow Electronics First Quarter 2025 Earnings Call, the company reported consolidated sales of $6.8 billion, surpassing their guidance range and remaining flat year-over-year on a constant currency basis. The Global Components segment achieved sales of $4.8 billion, above the guidance range, with a flat sequential performance in constant currency terms. The Enterprise Computing Solutions (ECS) segment generated sales of $2 billion, marking an 18% increase year-over-year or 19% in constant currency. ECS billings rose by 5% compared to the same period last year. The first quarter non-GAAP gross margin stood at 11.3%, while the non-GAAP operating income was $179 million, representing 2.6% of sales. In terms of future guidance, the company expects second-quarter sales to be between $6.7 billion and $7.3 billion, with Global Components sales anticipated to range from $4.8 billion to $5.2 billion. The ECS segment is projected to generate sales between $1.9 billion and $2.1 billion. Arrow Electronics also highlighted potential impacts from tariffs, estimating an incremental increase in Global Components sales by 2 to 4 percentage points sequentially, although this has not been factored into their revenue guidance. Non-GAAP diluted earnings per share for the second quarter is expected to be between $1.90 and $2.10.

Arrow Electronics Financial Statement Overview

Summary

Arrow Electronics demonstrates a stable financial foundation with moderate profitability and robust cash flow generation. Despite facing revenue contraction, the company maintains healthy margins and conservative leverage. The balance sheet reflects a sound position with a focus on maintaining financial stability. Continued enhancement of profitability metrics and revenue growth will be crucial for future performance improvements.

Income Statement

Positive

Arrow Electronics shows a mixed performance in TTM. The gross profit margin is 11.24% and net profit margin is 1.40%, indicating stable but not exceptional profitability. Revenue has decreased from the previous year, showcasing a revenue contraction trend. EBIT and EBITDA margins stand at 2.81% and 3.05%, respectively, reflecting moderate operational efficiency. The trajectory indicates caution in revenue growth despite steady margins.

Balance Sheet

Positive

The company maintains a stable balance sheet with a debt-to-equity ratio of 0.48, indicating a conservative leverage position. Return on equity (ROE) is at 6.55%, showing moderate profitability for shareholders. The equity ratio of 27.69% suggests a reasonable proportion of assets financed by equity. Overall, Arrow Electronics demonstrates financial stability with manageable leverage, though growth in equity returns remains moderate.

Cash Flow

Positive

Arrow Electronics exhibits robust cash flow management. The operating cash flow to net income ratio is 2.78, highlighting strong cash conversion capabilities. Free cash flow has decreased slightly but remains positive at $1.02 billion, indicating solid free cash flow generation despite a challenging revenue environment. This positions the company well for future financial commitments.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
27.81B	27.92B	33.11B	37.12B	34.48B	28.67B
	Gross Profit
3.13B	3.29B	4.15B	4.84B	4.20B	3.19B
	EBIT
781.73M	768.56M	1.47B	2.07B	1.56B	894.51M
	EBITDA
848.26M	984.44M	1.67B	2.26B	1.78B	1.10B
	Net Income Common Stockholders
388.19M	392.07M	903.50M	1.43B	1.11B	584.44M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
242.81M	188.81M	218.05M	176.91M	222.19M	373.62M
	Total Assets
20.26B	21.76B	21.73B	21.76B	19.54B	17.05B
	Total Debt
3.58B	3.12B	3.81B	3.77B	2.63B	2.26B
	Net Debt
3.34B	2.93B	3.59B	3.60B	2.40B	1.88B
	Total Liabilities
14.49B	15.93B	15.85B	16.15B	14.19B	11.90B
	Stockholders Equity
5.70B	5.76B	5.81B	5.55B	5.28B	5.09B
Cash Flow		Free Cash Flow
1.02B	1.04B	622.16M	-111.91M	335.93M	1.24B
	Operating Cash Flow
1.08B	1.13B	705.45M	-33.08M	418.98M	1.36B
	Investing Cash Flow
-95.03M	-94.44M	-72.32M	-57.71M	-60.12M	-138.79M
	Financing Cash Flow
-981.28M	-956.83M	-666.22M	109.78M	-463.30M	-1.23B

Arrow Electronics Technical Analysis

Technical Analysis Sentiment

Positive

Last Price119.91

Price Trends

50DMA

109.07

Positive

100DMA

110.17

Positive

200DMA

118.05

Positive

Market Momentum

MACD

3.11

Positive

RSI

60.91

Neutral

STOCH

30.33

Neutral

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 119.91 is above the 20-day moving average (MA) of 117.82, above the 50-day MA of 109.07, and above the 200-day MA of 118.05, indicating a bullish trend. The MACD of 3.11 indicates Positive momentum. The RSI at 60.91 is Neutral, neither overbought nor oversold. The STOCH value of 30.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 3 New Risks

Acquisitions, divestitures, or joint ventures may cause the company to experience operating difficulties and other consequences that may negatively impact the company's business, financial condition, and operating results, and the company may not be able to successfully consummate favorable transactions or integrate acquired businesses. Q4, 2024

If the company is unable to implement its Operating Expense Efficiency Plan effectively, it could materially adversely impact financial results. Q4, 2024

The company is subject to a variety of claims, investigations and litigation that could adversely affect the company's results of operations and harm the company's reputation, including intellectual property rights claims. Q4, 2024

Arrow Electronics Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNXN	78 Outperform	$1.67B	19.88	10.11%	0.69%	4.21%	6.38%
SNX	72 Outperform	$10.19B	15.17	8.40%	1.38%	4.62%	16.28%
ARW	71 Outperform	$6.22B	16.51	6.68%	―	-11.13%	-43.00%
AVT	70 Outperform	$4.17B	13.94	6.42%	2.61%	-10.52%	-42.40%
NSIT	68 Neutral	$4.22B	26.43	11.37%	―	-8.73%	-35.37%
SCSC	67 Neutral	$927.66M	14.80	7.32%	―	-14.07%	-9.65%
Sector *	61 Neutral	$11.29B	10.17	-6.88%	2.97%	7.41%	-8.93%

* Technology Sector Average

Performance Comparison

ARW

Arrow Electronics

119.91

-8.64

-6.72%

AVT

Avnet

50.94

-1.11

-2.13%

NSIT

Insight Enterprises

136.93

-59.06

-30.13%

CNXN

PC Connection

66.87

2.18

3.37%

SCSC

ScanSource

41.06

-6.92

-14.42%

SNX

TD SYNNEX Corporation

124.89

-2.16

-1.70%

Arrow Electronics Corporate Events

Executive/Board ChangesShareholder Meetings

Arrow Electronics Amends By-laws and Elects Directors

Neutral

May 8, 2025

On May 6, 2025, Arrow Electronics‘ Board of Directors approved an amendment and restatement of the company’s By-laws, introducing changes such as enhanced advance notice requirements for shareholder proposals, powers for meeting chairs, and proxy card color specifications. Additionally, at the 2025 Annual Meeting of Shareholders, ten directors were elected, Ernst & Young LLP’s appointment as the independent auditor was ratified, executive compensation was approved, and a proposal to replace supermajority voting provisions with simple majority standards was passed.

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.