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Arrow Electronics (ARW)
NYSE:ARW
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Arrow Electronics
(NYSE:ARW)
Rating:71Outperform
Price Target:―
Positive Factors
Billings Growth
In the ECS segment ARW delivered year-over-year billings growth.
Cash Flow
Despite a 4% increase in inventory, Arrow's cash flow grew to $326M due to a favorable move in accounts payable.
Improvement in Indicators
Arrow saw continued improvement in leading indicators in 4Q24 as book-to-bill approached parity, while backlog has stabilized with steady visibility.
Negative Factors
Earnings Guidance
Revenue and earnings guidance for the upcoming quarter are significantly below expectations, impacting the stock's performance.
European Market Challenges
The company's components segment is facing weak margins due to challenges in the European market and certain end markets.
Tariff Impact
Significant uncertainty remains with the potential impact of tariffs on end demand.
Arrow Electronics (ARW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.48B
Dividend YieldN/A
Average Volume (3M)456.04K
Price to Earnings (P/E)17.2
Beta (1Y)0.99
Revenue Growth-11.13%
EPS Growth-43.00%
CountryUS
Employees21,520
SectorTechnology
Sector Strength84
IndustryTechnology Distributors
Share Statistics
EPS (TTM)1.80
Shares Outstanding51,873,985
10 Day Avg. Volume483,497
30 Day Avg. Volume456,041
Financial Highlights & Ratios
PEG Ratio0.11
Price to Book (P/B)1.22
Price to Sales (P/S)0.00
P/FCF Ratio-60.58
Enterprise Value/Market Cap1.60
Enterprise Value/Revenue0.09
Enterprise Value/Gross Profit3.32
Enterprise Value/Ebitda2.24
Forecast
1Y Price Target
$110.00Price Target Upside-11.88% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering2
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. The company operates in two primary segments: Global Components and Global Enterprise Computing Solutions (ECS). Arrow Electronics offers a wide range of electronic components, including semiconductors, passive and electromechanical components, and enterprise computing solutions that cater to a multitude of sectors including telecommunications, information systems, transportation, medical, industrial, and consumer electronics.
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: 12.10%|
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
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.65
Positive
Balance Sheet
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.73
Positive
Cash Flow
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.78
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| 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 | ||||
| 231.88M | 188.81M | 218.05M | 176.91M | 222.19M | 373.62M | Total Assets |
| 21.40B | 21.76B | 21.73B | 21.76B | 19.54B | 17.05B | Total Debt |
| 2.84B | 3.12B | 3.81B | 3.77B | 2.63B | 2.26B | Net Debt |
| 2.61B | 2.93B | 3.59B | 3.60B | 2.40B | 1.88B | Total Liabilities |
| 15.40B | 15.93B | 15.85B | 16.15B | 14.19B | 11.90B | Stockholders Equity |
| 5.93B | 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
Positive
124.83
Price Trends
113.63
Positive
111.22
Positive
117.47
Positive
Market Momentum
2.44
Positive
63.84
Neutral
73.68
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 124.83 is above the 20-day moving average (MA) of 120.82, above the 50-day MA of 113.63, and above the 200-day MA of 117.47, indicating a bullish trend. The MACD of 2.44 indicates Positive momentum. The RSI at 63.84 is Neutral, neither overbought nor oversold. The STOCH value of 73.68 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 0 New Risks
Arrow Electronics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.61B | 19.20 | 10.11% | 0.95% | 4.21% | 6.38% | |
73 Outperform | $4.32B | 14.44 | 6.42% | 2.61% | -10.52% | -42.40% | |
71 Outperform | $6.48B | 17.18 | 6.68% | ― | -11.13% | -43.00% | |
70 Outperform | $10.50B | 15.64 | 8.40% | 1.43% | 4.62% | 16.28% | |
68 Neutral | $4.18B | 26.22 | 11.37% | ― | -8.73% | -35.37% | |
67 Neutral | $922.35M | 14.72 | 7.32% | ― | -14.07% | -9.65% | |
62 Neutral | $11.97B | 10.29 | -7.47% | 2.99% | 7.32% | -8.06% |
* Technology Sector Average
Performance Comparison
ARW
Arrow Electronics
124.83
-0.96
-0.76%
AVT
Avnet
51.51
<0.01
0.02%
NSIT
Insight Enterprises
131.72
-73.31
-35.76%
CNXN
PC Connection
63.45
-0.74
-1.15%
SCSC
ScanSource
40.82
-3.25
-7.37%
SNX
TD SYNNEX Corporation
125.14
-5.82
-4.44%
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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.